Question

Define compound interest and investing. Could you sacrifice something you spend money on today (lattes, cigarettes,...

Define compound interest and investing. Could you sacrifice something you spend money on today (lattes, cigarettes, lottery tickets, fast food, etc.) in order to invest a bit each month? What would it mean to you to feel secure about your retirement?

Homework Answers

Answer #1

In simple words, we can say that Compound Interest is the interest on interest. Interest is earned on the principal as well as the interest component. So that the entire amount is reinvested to earn a higher interest.

Investing means to invest in those assets which can create wealth. Assets that can create wealth can be Gold, Real Estate etc.

There is famous which says the intelligent person first invest and spends only what is left with them. So one should make a habit to invest first and then spend on other items such as cigarettes, fast food, lattes etc. This should be inculcated in the habit of each individual.

Money can't solve all of your problems but money can solve most of the problems. Money (in terms of wealth creating assets) should be their so that we can feel secure about our retirement. Otherwise security portion for the individual will be lost.

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