Compound Interest

Question: Why are we so blind?
Answer: We were taught this way... P = C (1 + r/n) ^nt where P = future value, C = initial deposit, r = interest rate (expressed as a fraction: eg. 0.06), n = # of times per year interest in compounded, t = number of years invested

I mean really? Were we ever expected to actually use, apply, and remember for the future what this meant? This was taught between 4th and 6th grades. When you were 12 did you even have an understanding for credit or savings? When I was 22 I still didn't have an understanding for credit or savings.

You need to spend some time actually calculating this again now that you are an adult! You will be amazed what numbers really mean. Did you know that when you are saving, the difference between a 6% mutual fund preformance and a 12% mutual fund preformance is not DOUBLE!

Compound interest is a product of the banking industry. It is designed to confuse you and make their pockets bigger. If it wasn't, who in their right might mind would ever pay 18% interest to borrow money on a credit card, while they were only getting back 1.22% interest on their savings account?

Using this link, you can put a credit card balance in, the amount you owe and how much it will be worth if you pay minimum interest. (kind of) As well, you can put savings amount in, expected interest, and see where you will be.

Pictured, Albert Einstein explaining the rule of 72, it's a great picture but I am not sure Einstein is credited for this formula... I don't think picture is real. The rule of 72 is a quick way to find how many periods of time it takes for your money to double. (Or the banks debt on you.)