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Karunakar CH
What You DO That Def...ย โขย 5m
"The best way to predict the future is to create it." โ Peter Drucker Today, weโll focus on Finance Concepts. Concept of the Day: Compound Interest Compound interest is a fundamental finance concept that builds wealth over time. Letโs explore it in a story format. Story: The Tale of Two Investors Once upon a time in a village, there were two friends, Ravi and Kiran. Both decided to start saving for their futures at the age of 20. Ravi saved โน10,000 every year in a simple savings account that earned 5% simple interest. Kiran, on the other hand, found a smart investment plan offering 5% compound interest. Raviโs Path: Ravi earned interest only on his initial amount. By the time he turned 30, he had saved โน1,00,000 (โน10,000 ร 10 years). His interest totaled โน50,000, giving him โน1,50,000 in his account. Kiranโs Path: Kiran reinvested the interest she earned each year, so her money grew exponentially. Over 10 years, her account grew to โน1,62,889, even though she also started with โน1,00,000. By the time they reached 50, Raviโs account had grown to โน2,00,000, while Kiranโs account ballooned to โน6,72,750. Kiranโs wealth multiplied faster, all thanks to compounding! Key Takeaways Compound Interest Formula: A=P(1+r/n)^nt Where: A = Future Value P = Principal Amount r = Annual Interest Rate (in decimal form) n = Number of Times Interest is Compounded per Year t = Time (in years) The earlier you start investing, the more time your money has to grow exponentially. Compound interest works best when you reinvest your earnings and think long-term.
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