Like simple interest, compound interest is applied in many fields. Compound interest is more complex than simple interest in many cases. Let's join giaphapdonggoi.net to learn about compound interest and how to apply compound interest in practice!
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1. What is compound interest?
Compounding interest can be shortened to compound interest (Compounding Interest) in a simple way of accumulating interest periods, that is, when you deposit the initial amount into the bank, you will receive interest, then the total amount of interest and money will be accrued. This year's capital will be accumulated into the principal of the next term and the same interest rate will be calculated. Compound interest has two important factors: time and interest.
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The concept of compound interest
Better understanding means that the amount of interest you receive will accrue to the initial capital to continue the next investment cycle. The more interest accrues to the capital, the higher the profit of the next cycle.
2. Compound interest formula
Like simple interest, the formula for calculating compound interest is as follows:
A = P* (1+r/n)^n*t
Inside:
A: future value is the amount of interest you receive after the end of the compounding period
P: principal amount (the initial investment amount that you contribute)
r: nominal interest rate per year (according to specific bank regulations)
n: the number of times the interest is directly added to the principal each year
t: Time to make compound interest
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The fastest compound interest formula
Specifically, explain the terms as follows:
+ Interest: As the formula for calculating interest, we can see the amount of interest will be accrued to the principal. Thus, if you deposit the initial amount in a place with a high interest rate, the money you receive will be more, which means that the interest rate is proportional to the amount you receive.
+ Principal amount (initial money): This is also a factor in determining the future amount that you receive. If the initial amount you send to deposit a lot, of course you will enjoy a larger amount when the term expires.
+ Frequency: This is the time period at which you deposit an additional amount. You can calculate by day, month, or year.
+ Time: An important factor in deciding whether the money is big or small. If you deposit for a long time, the interest accrued on the initial amount will increase. Interest calculation time can be calculated by day, month, year or quarter,...
3. Interest rates of some banks in Vietnam
Currently, there are many banks that have been issuing compound interest. However, the interest rate of each bank is different. Check out the interest rates of some banks below!
Bank Product Period Interest rate
Sacombank Future Deposits 15 years 4 years
Agribank School savings 1 - 18 years Flexible floating
Vietcombank Deposits, savings pay interest later Up to 5 years 5.3%/year
LienVietPostBank Save Poinsettia Flower 1, 2, 3, 5, 10 years Floating rate
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4. How to invest smart compound interest that you should know
Compound interest is considered a huge weapon in getting rich. With the profit received from the deposit, it brings many new opportunities and benefits for investors. Some tips to help you invest with compound interest effectively:
Invest early to take advantage of time
Time is what determines the interest rate of very large deposits. If you take advantage of the time you have to make a deposit, it won't be long before the amount you receive will be greater than you imagined.
Invest strategically and with a plan
Timing is an important key to your investment, but it's not everything. If you invest smartly and have a specific strategy with the amount you invest, then with the investment time, you will receive a huge amount of money with a smart strategy.
Choose banks with high interest rates
Compound interest increases quickly or not partly thanks to interest rates. Interest rates are extremely important in determining how much money you get. A sincere advice is that you do your research and decide which bank is good to invest your money in a reasonable way. Make a smart investment in fit
How to invest smart compound interest
>>The above information about compound interest has helped us have a closer, more realistic view of compound interest. The application and use of it intelligently depends on each person. However, anything needs to be learned. Learn wherever, whenever you can to access relevant knowledge! If you have any questions, please send them to us via hotline: 0911 904 968
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