08 March 2021, Monday

Fund your future

2020-03-18 00:00:00

Fund. Your. Future. This is our all-time motto, our testament, our belief and dedication. By making contributions to our investment offers, you do not fund us. And you not fund our clients either, but you lend them money. Eventually, you fund yourself by earning interest to make your future more prosperous.

Depending on your investment budget and risk appetite, you are always free to choose the offer or offers to invest in, knowing for sure the exit date and interest you will earn.

Your every investment matters. Day by day, light gains make heavy purses! Primarily, we mean the power of compound interest, of course. You might have heard of it and thus probably have an idea of how it works mathematically, but we bet you do not dare to imagine how powerful the outcome can be even from minor, but regular re-investing!

Just a small and simple illustrative example for you to show how it works.

What Is Compound Interest?

Compound interest, or compounding interest, is interest calculated not only on the initial principal, but also on all of the accumulated interest payments of previous periods on a deposit or investment – in contrast to simple interest, which is calculated only on the principal amount.

Thus, the effect of compound interest can be thought of as “interest on interest” which will your purse plumper at a much faster tempo.

The Formula

Compound interest is calculated by multiplying the principal amount by one plus the nominal interest rate raised to the number of compounding periods minus principal:

P (1 + i)nP,

where P = Principal,

i = nominal interest rate for the period of compounding in percentage terms, and

n = number of compounding periods.

The Effect

The longer the period of investment is and the larger is the number of compounding periods (frequency of interest calculation), the higher is the effect of compound interest that can boost the terminal value of your investment dramatically.

Lets assume you have invested your savings equal to €1,000 for 10 years at an annual interest rate of 10%. The simple interest, calculated on your investment for 10 years, will be equal to 100% (10% × 10), thus you will earn €1,000 on your investment.

However, compounded monthly, the value of the investment after 10 years would be calculated as follows:

1,000 (1 + 10%/12)10 × 12 – 1,000 = €1,707,

Thus, you would earn €1,707 and your return on investment in percentage terms would be 171% instead of 100%.

Although for the absolute majority of our projects interest is calculated and paid to the investors on monthly basis and is available for immediate withdrawal, think twice! Remember that, thanks to the power of compound interest, your investment appears to magically earn interest of its own!

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