Simple Interest And Compound Calculators


Do you know what a compound interest calculator is?  Well, it is not a device that measures how well you would fit into the lifestyle of "Big Love."  A compound interest calculator is a device that allows you to easily figure out how much interest you will earn from a plan that compounds interest, or, of course, how much interest you would be paying on a loan that compounds the interest you pay.

There are two basic types of interest: simple and compound.  If you are getting an automobile loan, for example, you would probably be better off getting a loan that offers simple interest.  Simple interest is...well...simpler.  And normally will save you money over the length of the loan.

If you are lending money out, you would be better served to have the interest compounded.  Compound interest is...well...compounded. In turn you will have a much better return on the money you lend out. 

Simple interest is easier to figure mathematically, and it works like this.  Of course, the interest rate is the amount of money it costs to borrow money.  If your interest rate is a simple rate, the amount you pay back is calculated only on the original principle. 

Compound interest is calculated on both the amount of the principle plus any outstanding interest.  If you are paying money out, you are going to pay quite a bit more for compound interest.  If you are receiving interest on an investment, you are going to get a lot more with compound interest.

Compound Interest = good if investing; bad if borrowing. Simple Interest = bad if investing; good if borrowing

Regardless of whether you are dealing with simple interest or compound interest, it can be difficult to figure out exactly how much money you are talking about, but for the math challenged, have no fear.  There is a way to turn that "percentage rate" into actual dollars and sense.  Simple interest calculators and compound interest calculators do just that.

Thanks to the genius and mathematical prowess of the computer and math gurus out there, you can determine how much interest you will be earning (or spending) in your investment (or loan). 

Just about any banker, financial advisor, or even many financial websites offer  simple interest and compound interest calculators.  All you have to do is put in the interest rate, the length of time, and the amount of principle and the simple interest calculator will show you very clearly how many dollars and cents that percentage rate actually is.

Regardless of the simple interest calculator or the compound interest calculator you still have to apply the best calculator to any financial decisions you may make. And that is your brain. Make your investment decisions wisely.
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Why You Should Invest.

Investing has become increasingly important over the years as the future becomes more uncertain.

People want to insure their futures, and they know that if they are depending on government benefits, and in some cases retirement plans, that they may be in for a rude awakening when they no longer have the ability to earn a steady income. Investing is the answer to the unknowns of the future.

You may have been saving money in a low interest savings account over the years. Now, you want to see that money grow at a faster pace. Perhaps you've inherited money or realized some other type of windfall, and you need a way to make that money grow. Again, investing is the answer.

Investing is also a way of attaining the things that you want, such as a new home, a college education for your children, or expensive 'toys." Of course, your financial goals will determine what type of investing you do.

Why You Should Invest Continues...

If you want or need to make a lot of money fast, you would be more interested in higher risk investing, which will give you a larger return in a shorter amount of time. If you are saving for something in the far off future, such as retirement, you would want to make safer investments that grow over a longer period of time.

The overall purpose in investing is to create wealth and security, over a period of time. It is important to remember that you will not always be able to earn an income... you will eventually want to retire.

You also cannot count on the social security system to do what you expect it to do. As we have seen with Enron, you also cannot necessarily depend on your company's retirement plan either. So, again, investing is the key to insuring your own financial future, but you must make smart investments!