Author: Fabi Pmoto

When determining how much house you can afford in the U.S., consider your annual income (aim for a home price around 2.5 to 3 times this amount), keep your debt-to-income ratio below 36% including your future mortgage, and factor in the size of your down payment. Be mindful of the impact of interest rates on your mortgage payments and decide between a 15 or 30-year mortgage term based on what you can comfortably afford. Don’t forget to include additional costs like property taxes, homeowners insurance, and ongoing maintenance and utilities in your budget. It’s also wise to use a mortgage…

Continuous compound interest refers to the mathematical concept where interest is added to the principal balance of an investment continuously, rather than at discrete intervals (e.g., annually, semi-annually, quarterly, etc.). In continuous compounding, the number of compounding periods becomes infinitely large while the time between periods becomes infinitesimally small.continuous compound interest formulaThe formula for continuous compounding is given by:A = Pert A is the future value of the investment/loan, including interest.P is the principal investment amount (initial deposit or loan amount).r is the annual interest rate (as a decimal).t is the number of years that the money is invested or…

The importance of compound interest cannot be overstated in the financial landscape. Serving as a driving force behind wealth accumulation, its transformative power has shaped the fortunes of countless individuals. With its unparalleled ability to amplify growth, compound interest underscores the principle that time and strategic investment can metamorphose even modest savings into remarkable wealth. As we delve deeper, let’s explore the eight pivotal aspects that highlight the profound significance of compound interest in our financial journey.1. Growth of InvestmentsThe significance of compound interest becomes particularly evident when examining its impact on the growth of investments. Unlike simple interest, which…

One of the most potent concepts in the world of finance and investing is that of compound interest. Coined by some as the “eighth wonder of the world,” this principle underscores the exponential growth of money over time. To illustrate its power, let’s delve deep into the mechanics and implications of compound interest.The Magic Money Jar: A Practical Illustration of the Power of Compound Interest.Imagine you have a magical money jar. Every time period, the jar magically adds extra money based on a percentage of what’s already inside. The more frequently the jar does its magic, the faster your money…

When it comes to understanding the magic of financial growth, knowing how to calculate compound interest is crucial. Compound interest is the interest you earn not just on your initial investment (or principal) but also on the interest that accumulates over time.To understand how to work out compound interest, you’ll first need to familiarize yourself with it’s formula:A = P(1 + r/n)ntA is the future value of the investment/loan, including interest.P is the principal investment amount (initial deposit or loan amount).r is the annual interest rate (in decimal form, so 5% would be 0.05).n is the number of times interest…

Compound interest frequency refers to how often the interest on an investment or loan is calculated and added back to the original amount (principal). Common frequencies include annually, semi-annually, quarterly, monthly, and daily.Imagine your family’s magical piggy bank. Unlike regular piggy banks where you just drop in money, this one has a special trick. Depending on how often you choose to let its magic work, it adds a bonus to the money you’ve saved inside. Now let’s explore the different compound interest frequency you will likely come across.5 Main Types Compound Interest FrequencyThere are 5 main types of compound interest…

Compound interest is when you earn money (interest) on both the original amount you put into a bank or investment (called the principal) and on any interest you’ve already earned from that original amount. The above definition of compound interest might sound a bit technical at first, but think of it as a snowball effect. Just as a snowball grows larger and faster when rolling down a hill because it collects more snow with each turn, your money grows faster with compound interest because you earn interest on both your initial deposit and the interest that accumulates.Let’s use the example…

Unveiling a suspicious activity or an unauthorized account on your credit report can be a jarring experience. Learning how to place a fraud alert on your credit is a recommended step to secure your financial identity. This guide provides a step-by-step approach to help you navigate through this process seamlessly.But what is a Fraud Alert on Your Credit? A fraud alert is a precautionary measure that informs potential creditors to verify your identity before extending any credit in your name. This is essential in cases where your personal information might have been compromised, ensuring that identity thieves cannot misuse your…

How to get 800 credit score or even higher is a quest that leads to the pinnacle of creditworthiness. With such a score, you stand in an elite group of consumers who not only get the best lending terms but also save significantly over time due to lower interest rates. This guide outlines actionable steps you could take to journey towards that desired 800 credit score.8 Steps on how to get 800 credit scoreStep No.ActionBrief Description1Pay Your Bills on TimeEnsure timely payments to build a positive payment history.2Maintain Low Credit BalancesKeep credit card balances low to manage credit utilization ratio.3Limit…

Does debt consolidation affect your credit score? Yes, it does. Understanding how debt consolidation affects your credit score is crucial for anyone considering this financial move. In this post, we’ll explore the various ways in which consolidating your debt can impact that all-important number.7 ways how debt consolidation can affects your credit score1. Initial Dip: The Immediate Impact on Your ScoreWhen you think about consolidating your debts, imagine you’re trying to organize your room. At first, it might seem like a great idea to put all your toys into one big box to clear up space. But when you actually…