Intererst

Hi Everyone,

I know many of you had trouble getting the hang of interest and how it pertains to money (although many of you did understand it). Don't worry. It will get easier and you will understand it.

For now I want you to learn the vocabulary listed below. We will go over during class tomorrow and I will explain each of these terms.

Vocabulary

Interest: The fee charged for using another's money or credit. It is expressed as a percentage rate over a period of time. For example, “My bank now pays 5 percent interest per year on my savings account.”

Compound Interest: Interest paid on the principal and the accrued interest. Interest earned on an investment is added to the principal. This becomes the new base on which future interest accumulates.

Principal: A sum of money owed as a debt or placed in a savings instrument, on which interest is calculated.

Rule of 72: A calculation used to find the number of years required to double your money at a given interest rate by dividing your compound return into 72. The result is the approximate number of years that it will take for your investment to double. 72/ interest rate = years to double money (i.e. 72/3 = 24 years.)

We will also start learning about simple and compound interest. Tomorrow we will begin with simple interest. If anyone wants to really impress me (and get a head start on what we are doing) you can go to google, look up simple interest, and then explain it to me tomorrow.

For those of you who might be terrified of math, DON'T BE!! This is not hard and you will all do very well. Have a great night and I will see you in class tomorrow!