Today I want to cover the personal finance topic. I usually teach this to the kids that I have in the lecture. It's kind of like weekend topic for them. But I thought why not make a post on this topic and explain it here on Hive.
First thing we are going to discuss is what is money? Basically money is a value being shared between the two parties. And the value that you give to each other depends on what you get in return. So you buy 1 dollar worth of the burger, you get the ingredients of those amount and the value is transferred.
Photo by Tima Miroshnichenko
Next concept that comes after money is saving money. You get 1 dollar and you save it in the bank. Banks are the one that holds your money. And for saving money they often reward you like say money deposits earn you some interest. And also the amount of interest that you earn kind of builds based on the banks declaration.
Let's just say you add some interest amount to that saving. Say if you hold 1 dollar for 1 year you earn 20 cents as an interest. Each year that accumulates and in 5 years that becomes another dollar. And in next 5 years that accumulates in another dollar. In short you would have more money saved through the interest. Now if you let your interest get added into the saving and then let it compound. It becomes the compound interest.
Most of the banks offer the compound interest for the deposits, mutual funds and also for holding your gold for interest. So this is very simple concept to learn. Earlier you start saving and letting the interest compound, things start to build. Which makes things easier for you to develop in the savings account. In short always let the compound interest develop.
I hope this tutorial helped you learn concept of compound interest. I'd be teaching variety of educational concepts especially in code and finance sector in upcoming tutorials.
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