Friday, March 21, 2014

Make Money Work for You Using Compound Interest

  This is the first time some of my readers have ever heard of compound interest. Just in case my example in my previous post didn't clearly explain compound interest, I've put together a list of definitions and examples from different websites to help me better explain what compound interest is and how it can benefit you.

 What is compound interest? It's interest earning interest. For example, suppose you saved and banked $100 a year ago. It earned $2 in interest last year. This year, you'll be earning interest on $102 (original savings plus the interest earned). That might not seem like much, but understanding that simple fact can have a major impact on your financial success.

  Compound interest is, in a nutshell, interest upon interest. That is, when an interest payment is added to the principal and then the whole thing (principal + interest) earns interest.

 The longer you save money, the more it can grow in value due to compound interest. Compound interest means you earn interest not only on the amount you deposit in a savings account, but also on all the interest you earned previously. (Provided you didn't take out any money, of course!)
I hope this helped! Please visit these sites, for further information.

What is the difference between Compound interest and Simple Interest?

  Compound interest is interest that is paid on both the principal (the original investment) and also on any interest the principle earns every year. For example, if I received 15% interest on my $1000 investment, the first year and I reinvested the interest back into the original investment, then in the second year, I would get 15% interest on $1000 and the reinvested $150 (15%) interest I earned from the previous year. Over time, compound interest will make much more money than simple interest.

  Simple interest is interest paid on the principal alone. Simple interest is called simple because it ignores the effects of compounding. The interest charge is always based on the original principal, so interest on interest is not included.
I'm sure you will agree that investment accounts that compound interest are much more profitable than accounts that simply pay interest on the principle alone.

Saturday, March 15, 2014

Budget Deficit Defined - Financial Blueprint

A Budget Deficit is the result of a government putting out or spending more money than it pulled in or made.

Wednesday, March 12, 2014

What the Heck is Cash Flow?!

Cash flow is cash that streams into and out of a person's or company's account over a period of time.
 There are various reasons for this cash flow such as wages, salary, sales, loans, revenue, and expenses. If you subtract your cash outflow from your cash inflow you will get your Net Cash Flow, which could either be negative or positive. For example, If you have more money coming into your account than going out, you have a positive Net Cash Flow. However, if more money is leaving your account than coming in you have a negative Net Cash Flow. Net Cash Flow is also considered to be a sign of a person's or a company's financial health.

Do You Have What it Takes to be an Entrepreneur???

An entrepreneur is someone who establishes and manages an enterprise or business, often taking on all financial risks.
Entrepreneurs are innovative and energetic individuals. They are moderate to high risk takers that show initiative and accepts the risk of failure. Leadership, management ability, and team-building are considered to be essential qualities of an entrepreneur.

Learn How to Buy More Investments Using O.P.M. (Other Peoples Money)

In finance, the term Leverage means to use credit or borrowed funds to buy an investment or a business .
 An investor or company will often use leverage to buy an investment or asset anticipating the ROI (return on investment) to be greater than the loan and interest owed. This could lead them to gain a greater profit than they would have gained if leverage was not used. Many financial experts believe that investors and corporations should avoid leveraging, because during an economic or business downturn investors or corporations with leverage assets and investments will often fall into financial distress. This is because they are unable to pay back the loan and interest owed. Yet many financial experts believe leveraging is a necessary evil because it allows investors and corporations to make large amounts of profits with a small initial investment.

Simple Interest Defined - Financial Blueprint

Simple Interest is interest paid on the principal, or original investment, alone. (the opposite of Compound Interest)

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