February 10, 2014 Admin | February 10, 2014 Compound interest can be your close friend or your deadly enemy. How can this be? What can you do about it?
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Compound interest can be your friend if you have and interest barring account such as stocks or bonds where you are getting about 6% a year. That compound interest will make your accounts grow and have more money in it to gain interest on. On the other hand if you have a credit card with a 20% interest rate working against you, your debt will be growing and have more to gain bad interest on. A way to avoid that is to not have a balance on your credit card at the end of the cycle. Once you pay off your debts you can make compound interest work for you with appreciating assets.
Great answer, Garrett. You covered the issue very well. Let’s review.
Compound interest can help you by owning appreciating assets (stocks, bonds, and Real estate) and letting them grow. On the other hand, it can cripple you by buying stuff and then letting that credit card balance grow and grow and grow. Follow Garrett’s advice. It is sound and it will serve you and your family for many years to come. Awake!