financial Info

What Is Compound Interest?

One of the most important concepts to grasp when you are thinking of saving and investing and why it is such a worthwhile activity is the concept of compound interest. The power of compounding is considerable and can take a tiny nest egg to a sizeable sum over time.

The definition of compound interest  is “the interest paid on capital and any previously accrued interest.” But how, exactly, does it work? The best way to explain compound interest is with an example. Let’s say you have decided to open a savings account. The account earns compound interest. This means that once you deposit the initial amount, it will earn interest on that amount over a certain period of time such as a month, or a year. At the end of that time period, the interest earned is then added to the initial amount you deposited, and then interest is earned on the new total over the next period, and so on and so forth. That is why it is called compound interest – since the new amount is compounded, or combined with the old amount to get a new total figure.

The idea is that if you can leave your savings alone for a long enough period of time, the compounding will cause the initial sum to grow exponentially. If you are not certain what that means, let’s just say it means “by a lot!” › Continue reading

Tuesday, March 30th, 2010 financial Info No Comments

The Different Types of Mortgages

 

If you are in the market for buying a new home, you may be curious about the different types of mortgage (also known as a home loan) options available to you. The main types of mortgages are adjustable rate and fixed rate – however there are many different subsets of these mortgages, and some may be more or less suited for your particular needs.

What Do I Need to Know Before I Get a Mortgage? You should have a clear idea of your monthly income, expenses, and a general idea of the price of the house you are able to afford. This will be largely based on the amount of money you have saved for a down payment and your estimated monthly mortgage payment, taxes, and insurance costs, which many financial experts say should not exceed 28 to 30 per cent of your monthly income. Most borrowers should be prepared to mortgage 80 to 90 per cent of the home’s value, and also be prepared for a 10 to 20 per cent down payment.

 The Basic Mortgage types. As stated above, there are two main kinds of mortgages to choose from: fixed rate and adjustable rate. A fixed rate mortgage means that the interest rate that is charged on the amount you are borrowing will stay the same for the entire time you hold the loan. An adjustable rate mortgage (also known as an ARM, or a variable rate mortgage) is one where the interest rate can fluctuate over time, depending on the general level of interest rates in the overall economy. › Continue reading

Thursday, March 4th, 2010 financial Info No Comments

Bankruptsy

Basic Information About Bankruptcy

If you are facing mounting financial troubles, you may be considering bankruptcy. There is a lot of confusion about bankruptcy and the different types of bankruptcy – and what happens during and after bankruptcy proceedings. Knowing exactly what you are getting into when considering bankruptcy is important to determine if it is truly the best or only option available.

What is Bankruptcy For?

According to the Federal Bankruptcy Laws, the goal of bankruptcy is to help a debtor who has gotten himself into insurmountable financial trouble a way to begin again and forgive certain debts (keep in mind some debts will not be removed via the bankruptcy process.) › Continue reading

Thursday, January 21st, 2010 financial Info 1 Comment