If you want to get the most return on money you save or invest, you want compound interest.Simple interest is paid only on the money you save or invest the principle, while compound interest is paid on your principle plus on the interest you have already earned.
Some advantages for simple interest is when you have to find short term loans, which is easier to find and when you have to borrow money. Its disadvantages are ignoring the compound and when the interest on interest doesn't have to be paid for. Some advantages for compound interest are when the interest is paid for the principal amount and its previous interest, its received the interest over time. Its disadvantages are when a person is allowed to use the fund for investment or consumption.
What are some of the advantages or disadvantages of simple interest and compounded interest? Compound interest the cost of aquiring money at a particular time. Plus all the interest earned on the interest that has accumulated over time. Money recieved sooner rather than later allows one to use funds for investment or consumption purposes. This concept is referred to the time value of money. When interest is paid on not only the principal amount invested, but also on any previous interest earned. By Kiara Greenleaf 1st period 4-4-13
Whether you are paying interest or being paid interest, it's important to fully understand how that interest is calculated. There are two basic types of interest: simple and compound. How each type is calculated will have an effect on the total amount paid out. Understand both types of interest so you will know how they affect the interest payments you make or receive.
Assume that you deposit $5,000 into an account that pays a simple interest of 5 percent per year, deposited annually to your account. After one year, the bank will pay you 5 percent of the $5,000, so $250 will be added to your account. This means that your account will now have $5,250 in it. After another year, you will again receive an interest payment -- but only on the original $5,000 principal, not the $5,250 that is now in your account. So you would receive another $250, giving you a total of $5,500 after two years.
Advantage of simple interest is for when you get a loan and you only have to pay that interest. When you have compound interest you want to have money in the bank so that interest builds on interest.
The advantages of compound are important advantages of borrowing money from family is the fact that you don't usually have to pay high-interest expenses on the loan. In some cases your family member may offer you the money at a very low- or no-interest rate at all. Also, instead of charging compounded interest (interest charged on both principal and interest), many personal loans from family members are based on a simple interest
One of disadvantages of interest compounds are the downsides of borrowing from a family member is that if you default on the loan, your financial reputation is not the only issue at stake. If you cannot repay the loan as promised your family reputation is at risk as well. Borrowing from a family member can lead to mistrust and conflict issues between family members if the obligation isn't repaid.
An advantage of compound interest is that you receive interest on top of the interest you have already earned, an advantage of simple interest is that they are better for short term loans.
The advantages for compound interest is that you get interest on top of interest. the advantage for simple interest is that you only pay interest on the principal only. simple interest is better and more commonly used for short term loans, compound interest is used for turning savings into more money
The Advantage of simple interest is just that simple all you have to do is pay that interest. The disadvantage to simple interest is that you don't really get anything from it, it's usually used for small loans that can be paid back quick.. The advantage of compound interest is that once your money is in there they increase your interest rate, doubling your money over a period of time. I don't really see the disadvantage of compound interest.
the compound interest advantage is earned not only on the original principal, but also on all interests earned previously. The disadvantage is before you invest, make sure you double check your local bank if compound interest will be used. The simple interest advantage is earned by adding to the original amount and the money is reinvested. The disadvantage is if you have credit card and you owe money on it, you will pay less interest if the the credit card company uses simple interest.
Some advantages of compound interest is that it can grow faster based on previously earned interest. It would be someone who takes out a savings account best interest to take compound interest because more money will be saved over time. One disadvantage of compound interest is if you take out a loan under compound interest because you would be paying higher interest rate every month. Some advantages of simple interest is that the rate on a loan will always be the same. One disadvantage is that the money in a savings account will not double as fast.
The difference between simple and compound interest is the difference between night and day. You will want to remember this simple rule: simple interest grows slowly, compounding speeds up the process.
Simple interest is interest on the principle amount while compound interest is when your principle and any earned interest earned interest. If you have invested money into an account you always want compound interest. Moreover, the relative advantages of compound interest escalate as your holding period increases.
their is a good way to look at it. With a simpe interest only your money is making money for you.As for a compound iterest not only your money is making more money, but your interest is also making you more money. Reason being a coumpound interest is best to have.
Ah compound intrest is the money you make, AND themoney that you make off of your intrest. Simple intrest is just your money making money for yourself. Comepound intrest is a much quicker way of racking up, and making more money..simple intrest on the other hand..builds up slowly
Simple intrest is basically money you get thats just for you. A compound intrest is more enteresting because its money that you make plus money thats comming from your simple intrest.
There are many disadvantages of simple intrest and compound. This goes for advantages. It depends on how you look at it. If i owe some body i rather have simple intrest but if it is for my own good i rather have compound intrest. Simple you pay what you owe and compound is like double for my trouble wit intrest..
compound interest is what you want to do when you want good interest when you have a savings account and etc and simple interest is what you want when your paying back loan or etc
The advantages of simple interest are money gained when someone takes out a loan from a lender the interest rate is being added to the prinicipal value. The disadvantages of simple interest are money that is added to an principal amount that you have to pay over a period of time. The advantages of compound interest are money being paid to you from an investment from interest on interest on principal. The disadvantages of compound interest are unneccesary interest charged to your account or investments that can get expensive from the principal.
The advantage of compound interest is that when you put your money in a back, it starts to double itself over time. I don't believe there's a disadvantage to it. I look at it as if your money is making money for you. The advantage to simple interest is that you make a certain payment a month to your bank & then the money sits there over time. Whenever you feel like you want to take your savings out, you'll see that it grew slightly over time. The disadvantage of simple interest is that you only can make small payments & use it for small loans.
simple intrest is great for loans,when you want to buy something expensive like a house of a company,it is also just the intrest on top of what you are taking out.however its not that much money for the long term. Compound intrest is great for saving because over the long term your money doubles and you get paid more then if you where to have a simple intrest.the only disadvantage would have to be its intrest on top of intrest which means its not good for loans.
Simple intrest is basically money you get thats just for you. A compound intrest is more enteresting because its money that you make plus money thats comming from your simple intrest.
The advantage for simple interest is that its interest rates are generally supplied to covers the collateral risk of defaulting loans. The disadvantage for compound is that the practice of compounding in credit as we all know, charged to outstanding balances can be very high, and unless you read small print you arent going to be prepared for the way interest is charged on your card. Tanou Diallo 1st period
Simple interest is money you can earn by initially investing some money (the principal). A percentage of the principal is added to the principal, making your initial investment grow. Advantages for a Compound Interest may be the earlier you start saving, the more you make from compound interest. And Disadvantages may be the longer you interested charged to outstanding balances can be very highness your money, the more powerful the compound interest effect.
Similarities Both simple and compound interest grow your money. If you keep your account in credit, at the end of the year you will have more money than when you started. Both mechanisms reflect the cost to the bank of borrowing your money. When applied to a loan you have taken out, they reflect the cost to you of borrowing that cash. Differences Simple interest is computed only on the principal you have invested or borrowed. Compound interest is computed on the principal, plus whatever interest has already been added. Simple interest is usually used on short-term accounts or loans. Compound interest is usually used on long-term accounts or loans. Compound interest essentially works much faster than simple interest; its growth is exponential, whereas that of simple interest is constant.
advantage of compound interest is that it's speed up the procesess which means the interest is grow faster based on the previous and simple interest you have to do is pay that interest which means the interest is that they are better for short term loans
advantage of compound interest is that it's speed up the procesess which means the interest is grow faster based on the previous and simple interest you have to do is pay that interest which means the interest is that they are better for short term loans
If you want to get the most return on money you save or invest, you want compound interest.Simple interest is paid only on the money you save or invest the principle, while compound interest is paid on your principle plus on the interest you have already earned.
ReplyDeleteSome advantages for simple interest is when you have to find short term loans, which is easier to find and when you have to borrow money. Its disadvantages are ignoring the compound and when the interest on interest doesn't have to be paid for. Some advantages for compound interest are when the interest is paid for the principal amount and its previous interest, its received the interest over time. Its disadvantages are when a person is allowed to use the fund for investment or consumption.
ReplyDeleteMichael Matthews
1st period
What are some of the advantages or disadvantages of simple interest and compounded interest? Compound interest the cost of aquiring money at a particular time. Plus all the interest earned on the interest that has accumulated over time. Money recieved sooner rather than later allows one to use funds for investment or consumption purposes. This concept is referred to the time value of money. When interest is paid on not only the principal amount invested, but also on any previous interest earned. By Kiara Greenleaf 1st period 4-4-13
ReplyDeleteWhether you are paying interest or being paid interest, it's important to fully understand how that interest is calculated. There are two basic types of interest: simple and compound. How each type is calculated will have an effect on the total amount paid out. Understand both types of interest so you will know how they affect the interest payments you make or receive.
ReplyDeleteAssume that you deposit $5,000 into an account that pays a simple interest of 5 percent per year, deposited annually to your account. After one year, the bank will pay you 5 percent of the $5,000, so $250 will be added to your account. This means that your account will now have $5,250 in it. After another year, you will again receive an interest payment -- but only on the original $5,000 principal, not the $5,250 that is now in your account. So you would receive another $250, giving you a total of $5,500 after two years.
ReplyDeleteAdvantage of simple interest is for when you get a loan and you only have to pay that interest. When you have compound interest you want to have money in the bank so that interest builds on interest.
ReplyDeleteTerrence Beebe
2nd Period
The advantages of compound are important advantages of borrowing money from family is the fact that you don't usually have to pay high-interest expenses on the loan. In some cases your family member may offer you the money at a very low- or no-interest rate at all. Also, instead of charging compounded interest (interest charged on both principal and interest), many personal loans from family members are based on a simple interest
ReplyDeleteOne of disadvantages of interest compounds are the downsides of borrowing from a family member is that if you default on the loan, your financial reputation is not the only issue at stake. If you cannot repay the loan as promised your family reputation is at risk as well. Borrowing from a family member can lead to mistrust and conflict issues between family members if the obligation isn't repaid.
ReplyDeleteAn advantage of compound interest is that you receive interest on top of the interest you have already earned, an advantage of simple interest is that they are better for short term loans.
ReplyDeleteThe advantages for compound interest is that you get interest on top of interest. the advantage for simple interest is that you only pay interest on the principal only. simple interest is better and more commonly used for short term loans, compound interest is used for turning savings into more money
ReplyDeleteKayla Walker
1st period
The Advantage of simple interest is just that simple all you have to do is pay that interest. The disadvantage to simple interest is that you don't really get anything from it, it's usually used for small loans that can be paid back quick.. The advantage of compound interest is that once your money is in there they increase your interest rate, doubling your money over a period of time. I don't really see the disadvantage of compound interest.
ReplyDeleteErica Bowles
2nd Period
the compound interest advantage is earned not only on the original principal, but also on all interests earned previously. The disadvantage is before you invest, make sure you double check your local bank if compound interest will be used. The simple interest advantage is earned by adding to the original amount and the money is reinvested. The disadvantage is if you have credit card and you owe money on it, you will pay less interest if the the credit card company uses simple interest.
ReplyDeleteSome advantages of compound interest is that it can grow faster based on previously earned interest. It would be someone who takes out a savings account best interest to take compound interest because more money will be saved over time. One disadvantage of compound interest is if you take out a loan under compound interest because you would be paying higher interest rate every month. Some advantages of simple interest is that the rate on a loan will always be the same. One disadvantage is that the money in a savings account will not double as fast.
ReplyDeleteThe difference between simple and compound interest is the difference between night and day. You will want to remember this simple rule: simple interest grows slowly, compounding speeds up the process.
ReplyDeleteSimple interest is interest on the principle amount while compound interest is when your principle and any earned interest earned interest. If you have invested money into an account you always want compound interest. Moreover, the relative advantages of compound interest escalate as your holding period increases.
their is a good way to look at it. With a simpe interest only your money is making money for you.As for a compound iterest not only your money is making more money, but your interest is also making you more money. Reason being a coumpound interest is best to have.
ReplyDeleteAh compound intrest is the money you make, AND themoney that you make off of your intrest. Simple intrest is just your money making money for yourself. Comepound intrest is a much quicker way of racking up, and making more money..simple intrest on the other hand..builds up slowly
ReplyDeleteSimple intrest is basically money you get thats just for you. A compound intrest is more enteresting because its money that you make plus money thats comming from your simple intrest.
ReplyDeleteThere are many disadvantages of simple intrest and compound. This goes for advantages. It depends on how you look at it. If i owe some body i rather have simple intrest but if it is for my own good i rather have compound intrest. Simple you pay what you owe and compound is like double for my trouble wit intrest..
ReplyDeletecompound interest is what you want to do when you want good interest when you have a savings account and etc and simple interest is what you want when your paying back loan or etc
ReplyDeleteThe advantages of simple interest are money gained when someone takes out a loan from a lender the interest rate is being added to the prinicipal value. The disadvantages of simple interest are money that is added to an principal amount that you have to pay over a period of time. The advantages of compound interest are money being paid to you from an investment from interest on interest on principal. The disadvantages of compound interest are unneccesary interest charged to your account or investments that can get expensive from the principal.
ReplyDeleteThe advantage of compound interest is that when you put your money in a back, it starts to double itself over time. I don't believe there's a disadvantage to it. I look at it as if your money is making money for you. The advantage to simple interest is that you make a certain payment a month to your bank & then the money sits there over time. Whenever you feel like you want to take your savings out, you'll see that it grew slightly over time. The disadvantage of simple interest is that you only can make small payments & use it for small loans.
ReplyDeleteLexi Breed first period
simple intrest is great for loans,when you want to buy something expensive like a house of a company,it is also just the intrest on top of what you are taking out.however its not that much money for the long term.
ReplyDeleteCompound intrest is great for saving because over the long term your money doubles and you get paid more then if you where to have a simple intrest.the only disadvantage would have to be its intrest on top of intrest which means its not good for loans.
Simple intrest is basically money you get thats just for you. A compound intrest is more enteresting because its money that you make plus money thats comming from your simple intrest.
ReplyDeleteThe advantage for simple interest is that its interest rates are generally supplied to covers the collateral risk of defaulting loans. The disadvantage for compound is that the practice of compounding in credit as we all know, charged to outstanding balances can be very high, and unless you read small print you arent going to be prepared for the way interest is charged on your card.
ReplyDeleteTanou Diallo
1st period
Simple interest is money you can earn by initially investing some money (the principal). A percentage of the principal is added to the principal, making your initial investment grow. Advantages for a Compound Interest may be the earlier you start saving, the more you make from compound interest. And Disadvantages may be the longer you interested charged to outstanding balances can be very highness your money, the more powerful the compound interest effect.
ReplyDeleteDezeray Dukes
1st Period
Some advantage for a compound interest is making your investmen grow, some disadvantages is you will be charged the longer it takes
ReplyDeleteSimilarities
ReplyDeleteBoth simple and compound interest grow your money. If you keep your account in credit, at the end of the year you will have more money than when you started. Both mechanisms reflect the cost to the bank of borrowing your money. When applied to a loan you have taken out, they reflect the cost to you of borrowing that cash.
Differences
Simple interest is computed only on the principal you have invested or borrowed. Compound interest is computed on the principal, plus whatever interest has already been added. Simple interest is usually used on short-term accounts or loans. Compound interest is usually used on long-term accounts or loans. Compound interest essentially works much faster than simple interest; its growth is exponential, whereas that of simple interest is constant.
advantage of compound interest is that it's speed up the procesess which means the interest is grow faster based on the previous and simple interest you have to do is pay that interest which means the interest is that they are better for short term loans
ReplyDeleteadvantage of compound interest is that it's speed up the procesess which means the interest is grow faster based on the previous and simple interest you have to do is pay that interest which means the interest is that they are better for short term loans
ReplyDelete