The Mathematics of Finance (Final)

Answer the following questions below:

1. When is compound interest your friend?
- Compound interest is your best friend when you earn interest on your savings. It
is even a better friend when you earn the best available interest rate.
- Well, who wouldn’t want to earn from their savings right? For me, compound
interest is only good when and only when you earn interests from your savings.
Because what’s the use if you’re only saving but not getting any goods (interest)
so that you can have money to buy things you want. This compound interest
gives both a positive and negative outputs that you should be responsible of
taking.

2. When is compound interest your enemy?

- When people have outstanding debt, they pay interest, instead of earning it, and
the interest gets added to the amount that they owe. In this scenario, compound
interest is their worst enemy.
- This is what I meant on my first statement that compound interest can be positive
or negative. The best way to avoid having an outstanding debt for me is always
having a plan when you are about to borrow a lot money. Having a perfect plan
will help you so that you won’t have an outstanding debt. It sucks when you pay
the interests from your saving. So you should not underestimate what compound
interest can do to you and your life.

Make a reflection about compound interest. Upload your work here in the dropbox.