What is compound interest and how does it assist life?
Initially we get to know compound interest at school, we learn how to calculate it but we don’t completely understand what it is for. At first let us remind you what compound interest is. Compound interest is calculated on the balance owing plus any previous interest charges. Let’s not examine the kilometers of theory. Just allow me to illustrate. Let’s assume you can carry $100 on a deposit with a 12% of annual percentage rate. In a year you’ll get $112. It is quite clear. But if you deposit your money with a 12% interest compounded monthly you’ll get: 12% APR means 1% per a month, so in a month you will have $101. And then when compound interest will show its worth. You left your money on the account for the second month but now the interest is counted not of $100 but of $101. In two months you’ll get not $102 but $102, 1. In three months you’ll get $103, 0301, in one more month you’ll get about $ 104, 0604. In a year the sum will grow to $112, 68. Simple interest gives you a profit from the basic sum and compound interest gives a profit from the sum including interest you earned last month. Notice that the compound interest earned is considerably more than the corresponding simple interest. Seeing your money grow like this might well entice you to invest more money each month and really reap the benefits of this wealth-generating principle, especially if you can deposit much more than $100.
Bullet points which are necessary to know and take into account in order to multiply your money successfully
The image of financially competent person (his pattern of thought, his reasons and methods of training for making progress) Setting an object and tasks (not theory but practice) Formation of investment portfolio (how to give a preference to an optimal method of financial management) "It is impossible to think in thousand and to earn millions!" Many people think: «if I had one million (and not important of euros or dollars), then I could..." But actually, only one person in one hundred is capable to keep and increase his million living comfortably at the same time, instead of just squandering money. Such people are considered to be financially competent. And one in a hundred is quite optimistic estimation. Sometimes other people say that money “sticks” to them or they were born to make money as the sparks fly upwards. But such method of approach doesn’t fit for us. And, of course, it doesn’t fit for you! Let's explain in details. Financial competence is not an ability to earn money. In fact, it’s an ability to keep and increase money that is already available. A person doesn’t have to limit his consumption level essentially. He must understand that saving $10 now will give him $100 profit in future. The main problem is that people think too narrowly. They consider that if they place their funds on a deposit account with a 10% interest it will be a higher aerobatics. And if they divide their money into several deposits in different banks it will be absolutely immoderately. And, of course, it won’t. Financial competence consists in the ability to transform all money into the passive income (notice just into passive, otherwise it becomes business already). Actually it is not important what sum and for what term you are going to deposit, the main thing is that: Money gains Money Always and Everywhere! More Money Gains More Money! Less Money Gains Less Money, But Always and Everywhere!
Every successful person understood this principle, he understood and he will never forget it. Probably some people understood the principle despite that they didn’t even clearly define it. It’s beyond their description but they can sense it intuitively. You should also get the hang of the situation! The main reason of the financially competent person’s actions is a wish to force his money to gain money. Don’t perceive the phrase generally. Try to penetrate its sense, to gear up for the “wave”. It’s not a law, it doesn’t depend on you but it works per se. You can only adapt it to yourself. If you do it only then you can figure on succeeding. Object and tasks 1. Write down on a paper your monthly income; 2. Write down, how much you’d like to get; 3. Calculate the difference. This difference will be the beginning of actions. (But it is important to understand, that the passive income it not a business and you won’t get 200 % a month); 4. So, your purpose is to reduce the calculated difference to 0, but that’s not all; 5. Establish the term of achievement of your purpose within one year; 6. Your task is to plan the expenses every month within a year, reducing unnecessary charges (for example, not pay for an idle broadcasting center) and investing all saved money. How and where to invest look further; 7. Besides it, postpone 5 dollars daily. How to invest There are lots of ways. To be financially competent is to be able to choose and to use the optimum package of directions, or to tell more correctly to choose their realization. There’s no sense to use all the ways. You should just create a certain portfolio of directions, not more than 2-3, and become a real expert in those exact ways. The market nature Many people enter the market wasting time and money; they lose heart and leave the market for ever. That’s because evolution leaves the strongest, and weak ones are eaten by sharks. And now I am going to describe the market nature based on my personal belief in which I trust. Let’s start from triunity. The problem is that a person isn’t able to understand the meaning of triunity. He is able to understand all-or-none. He considers something to be good or bad, but he doesn’t realize that it is good just because it’s good for him. Allow me to illustrate. Let’s assume there is something a single whole, one side of the coin for example, and there is something the second whole, something opposite like the other side of the coin. Together these both sides compose a coin. But there is the third side that unites them. It’s their contents and at the same time it is the law of conflict of opposites. There is no balance in triunity because there is an eternal conflict of opposites. This conflict is called evolution.
Now to what I all conducted it? Thereto that, for example, mathematics is abstractive. And the statement that 1+1=2 is idealization, to put it in simpler words, it contrasts with evolution or just with real life. You can’t find two ideal apples in the whole world. Therefore it is impossible to describe the nature and the Universe mathematically. Now let me tell you a few words about constitution of the Universe. The Universe is the multidimensional hierarchical dynamic structure, each element of the structure has its own integrally generated structure which is a cell of integral structure of the higher hierarchy and at the same time consists of other integral cells of the lowest hierarchy. This structure can describe not only triunity but absolutely everything that exists in the Universe, every process and phenomenon. It’s better to set an example. Draw a circle. Then draw six more circles within it. Repeat these actions several times and then draw a circle round all your circles and thus to infinity. In threedimensional space it will look like a spiral. The example is primitive because the Universe is multidimensional and there are infinitely many directions. What is price chart? If to come nearer to reality it is a projection of all processes which change the price for a plane in the form of axes of time and prices. Unfortunately, because of technical imperfection this projection acquires a group of calculating errors and does not display the ideal picture, but fortunately these errors are small and make no more than 15-10 % in the aggregate. Scientists are still battling long struggle with the nature chaos and as I have already told mathematics is powerless about it. But first base is reached. Scientists have noticed regular occurrence. The thing is that chaos elements are integral and consist of other integral elements. Do you remember the structure I described? Here they have found out it. Each element is a finished cycle of evolution which directly depends on an element that is above in the hierarchy and that is lower. And now actually let’s talk about the market and why it is possible to earn on it. In fact it is possible to earn at the expense of structure integrity. If the price punches any level of integral structure, let’s assume this rate is equal to 100 points, for example, the price goes distance aside as much as 100 points. As the time interval can be increased or reduced infinitely (theoretically) determinacy and nondetermination are switched as a switch, actually they revolve more precisely as a pendulum. If to come down to resistance and support, let’s assume them to be an integral brick on the given time frame. Inside the brick there is considerable quantity of other bricks, each of them contains an integer number of smaller bricks and so on towards reduction and increase. And so uncertainty determines borders of an integral brick but as it is possible to reduce them to negative infinity, it turns out that uncertainty is present during each moment of time and at the same time if to increase the borders to positive infinity there will be a continuous determinacy. This is an integrated process. We simply choose the concrete size of a brick and we know, that the price goes from border to border, in case of excess the price passes a brick of the same size, in case of return the price forms a brick of another but certain size which is necessary to get into a larger brick within a longest time frame. And we do not consider smaller bricks which compose the observed brick. Ipso facto it is possible to go deep and assert that during each moment of time there are fate decrees but at the same time we always have a choice. We form our karma via decisions and choices. Simply speaking, we create our own destiny ourselves. Any choice is a freedom inside a brick of destiny, but from now on this choice will create a new brick and will define our destiny again. I.e. any our choice defines our future and at the same time it fulfils destiny which has been
created by the previous decisions. All these aspects are interconnected within a single multidimensional dynamic hierarchical process. In conclusion I’d like to say that I just had an intension to define the base because the beginners usually lack of it. They don’t understand it and that’s why they rush about seeking where the rub is.