April 24, 2023
Question: What’s the difference between simple interest and compound interest?
Answer: Great question!
The best way to explain is to give an example:
Let's say you put $10,000 in a CD at 5% per year
Simple Interest would give you $500 per year. You would get this same amount each year.
Compound Interest would give you the same amount the first year, but then the following year you would earn 5% on $10,500, so the interest would be $525, and the next year you would earn $551.25 ($11,025 * 5%), and so on.
Do your friends ask you financial questions?
Pass those questions on to us at AskRPG@rootedpg.com and we will feature them in our future newsletters.