Grow Your Boobs Money

Boom! Fireworks! Clap! Clap!  The Blog Carnival has landed in Money Soldiers.

Money Soldiers Blog Carnival No. 1

Welcome to the first edition of the blog carnival.  For our first edition, we received only one blog article submission.  Hooray!  We actually received two but I decided not to include the other one.  Quality ruled over quantity just like good ruling over evil.  The article we received is about compound interest and how it is meant to make you rich.  Before we proceed with the carnival, let us talk a little about compound interest.

Grow Your Money

Making Money by 401(K) 2012, on Flickr.  This work is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License.

I am sure you have heard the term, compound interest, right?  What does compound interest mean in layman’s terms?  Simply put, compound interest is not simple interest.  You could not get any simpler than that but I must say that definition is not very helpful.  When we mention compound interest we usually specify as well the compounding period.  We say something like, “10% compound interest, compounded annually”.  The compounding period varies, the usual are bi-annually, annually and quarterly.  Most of the time when the compounding period is not mentioned it is assumed to be annually but it will not hurt if you would ask.  When in doubt, it is always better to ask than to assume.  As an example, compound interest of 10% compounded annually means you compute the interest earned by the money invested which is called the principal, at the end of the first year.  Then you get the new and adjusted principal by adding the interest earned to the original principal.  You then use the new principal to compute for the interest earned on the second year, add that interest to the current principal to obtain another new and adjusted principal and repeat the process.  I hope I do not confuse you.  The key point to remember is the principal is always adjusted at the end of the compounding period by adding to it the interest earned.  From this definition of the compound interest you begin to see the beauty and power of compound interest.  Your money grows a lot faster because the principal keeps on being adjusted up.  To really take advantage of the power of compound interest, you need to start early on your investment with compound interest because as time passes compounding gets even more powerful.

 Is Your Head Spinning Yet?

We get it.  Compound interest is awesome but on the practical side, just where can we put our money to make it grow through compound interest?  I looked left, I looked right and too bad I could not look all the way around.  My head could not rotate 360 degrees and your head, too I think or else we would all be Linda Blair of the Exorcist with green pea soup shooting out of our mouths.  My point is it is quite hard to look for places where you can put your money and let it earn through compounding at a reasonable rate.  Did I hear you say bank accounts?  I tried searching for some of the top banks I know and it was deflating to learn about their interest rates.  Most of the interest rates were below 1% per annum and their websites did not even say whether those interests were simple or compound.  When in doubt, ask.  Yes, I will but not now because I am still writing this post.  I think we have better chances in finding a good investment with a decent compound interest where we can put our money in by looking at Mutual Funds, Money Market Funds, Equity Funds and all those Funds which I barely know anything about but I am eager to learn about. My dear Money Soldiers readers, should you know anything about those funds please let me know.  Teach me.  Educate me so together we can start investing and become compounding interest heroes.

Our short, little talk above about compound interest turned out to be not so short after all.  The word count is now 644 and still counting.  Now, let us begin the carnival.