HELLO

What did Albert Einstein said about compound interest?

• “ Compounding interest is the eighth wonder of the world. He who understands it, earns it…he who doesn’t…pays it”

• “Money makes money. And the money that money makes, makes money.”

• “ Spend less than you make, always be saving something. Put it into a tax-deferred account. Over time, it will begin to amount to something. This is such a no-brainer”

• “My wealth has come from a combination of living in America, some lucky genes, and compound interest.”

What is compound interest?

• generating earnings on your initial investment and on earnings the investment has already made.

• the interest on savings calculated on both the initial principal and the accumulated interest from previous periods. 

• the price you pay to borrow money or the cost you charge to lend money.

• a powerful force for consumers looking to build their savings

How compound interest works

 The difference between simple interest and compound interest:

• Simple interest and compound interest affect everyone the same

• The return of compound interest is much higher than simple interest

• The growth in compound interest method is slower than simple interest

• The return of compound interest is much fewer than simple interest

The compound interest on 30000 at 7% per annum is 4347. The period (in years) is

• 2

• 3

• 4

• 5

Which of the following statements is true about the compound interest?

• Compounding interest doesn’t affect everyone the same

• Compound interest is the 8th wonder of the world

• Compound interest is calculated by multiplying the loan's principal amount by the interest rate by the term.

• Compound interest makes you poor

Which way of investing should an investor focused on compounding interest choose ?

• Chasing speculative and very trendy stocks.

• Investing conservatively

• Both of a and b are correct.

• Neither a and b is correct.

Compounding interest affects everyone the same, because it depends on time

• TRUE

• FALSE

 Starting to invest at early age is a big advantage for an investor:

• True. The longer time goes, the more money you get.

• False. It makes no difference among different ages when making investments.

Charlie Munger has likened compound interest to a snowball rolling down a hill because:

• Your wealth naturally attracts more wealth thanks to compound interest

• You need to work hard all the time to broaden your riches.

• You don’t need to put much effort as you can naturally make more money thanks to compound interest.

• The work you do in the beginning is often painful and tiring. But once your wealth snowballs, then your wealth naturally attracts more wealth.