The number of compounding periods per year will affect the total interest earned on an investment. For example, if an investment compounds daily it will earn more than the same investment with the same stated/nominal rate compounding monthly.
Compound interest can have a dramatic affect on the growth of a single deposit. By dividing 72 by your investment return you can determine the amount of time required for your money to be worth about twice as much as it is today.
A penny saved is a penny earned, but a penny saved today is a penny earning more. It is important to start saving as soon as possible for events such as retirement due to the impact of compounding. If you start saving now you will need to save considerably less than if you wait a few years.
The rate of return (ROR), sometimes called return on investment (ROI), is the ratio of the yearly income from an investment to the original investment. The initial amount received (or payment), the amount of subsequent receipts (or payments), and any final receipt (or payment), all play a factor in determining the return.
Taxes and inflation can have a dramatic effect on the growth of an investment.
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