Question

Explain the benefits of a compound interest in an investment

Answer 1

Compound interest grows money two time faster than simple interest. Interest of each month multiplied by the interest of total period in a year. It may also be on quarterly, half yearly or annual basis.

Explanation:

Compound interest calculated on the basis of accumulated interest and interest on original principles. That's why it grows money larger than simple interest. We can also earn compounded interest in money market and certificates of fixed deposits.

We can earn more money by investing the saved money in a rolling basis. We can make more interest by investing it in-

• Saving account investment
• Bonds or certificates

Compound interests are doubled of simple interest by multiplying simple monthly interests by total number of period.

Answer 2

The compound interest refers to the interest a person gets on his market accounts and certificates of Deposits

Explanation:

Compound interest basically  makes your sum of money grow at a faster rate in comparison to the  simple interest because you not only earn returns on your investments but you also earn returns on that returns at the end of every compound period which can be daily ,monthly,quarterly or annually

Bonds like zero coupon bonds  incorporate compounded growth

In simple words Compound interest the interest is calculated not only on the accumulated interest but on the original principal also  

That is the basic reason why compound interest is considered in a investment