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1. Compound interest

Everyone must know what interest means. In fact, compound interest simply means interest roll interest. Ordinary interest rates are generally not too high and will not bring much interest in a short period of time. For example:

——The fixed deposit in the bank is 10000 dollar, the one-year interest rate is 1.5%, and the interest rate is only 150 dollar a year;

——However, if it is also 10000 dollars, the fixed deposit for 30 years is long, so the interest rate is 2.75% higher. After 30 years, the total principal and interest are 22566 dollars, and the total interest is 12566 dollars, more than doubling.

——Similarly, RMB 10000 is deposited regularly. If compound interest is not required, even if the interest rate is 2.75%, the annual interest is 275 yuan, and the 30-year interest is 275 * 30=8250 yuan in total.

Einstein said that time and compound interest are the eighth miracles in the world;

Buffett summed up his secret of success like this: "Life is like a snowball. The important thing is to find very wet snow and long slopes";

To explain the "snowball effect" more generally, it is necessary to find enough long slopes and enough wet snow. For financial management, the initial investment is a small damp snowball. The hillside is equivalent to time, and the snow on the hillside is equivalent to compound interest. With the passage of time, the snowball gets bigger and bigger, and the speed of getting bigger and bigger is getting faster and faster.

I will calculate an account for you to let you know how mighty the power of compound interest is. Take the housing loan as an example. Suppose you want to buy a large house, and borrow 5 million from the bank. The annual interest rate of the commercial loan is 4.90%, the mortgage is 30 years, and the repayment method is equal to the principal and interest. Guess how much money you need to pay back in these 30 years—— 9.55 million, my god. I borrowed 5 million, and the interest is 4.55 million. That's right. This is the effect of time and compound interest. Similarly, if we apply compound interest to financial management, the result is also great.

Therefore, the earlier you start financing, the better.Many people tend to ignore the role of time compounding. They do not know that time is precious. Time is real money. The compound interest of time is a magic weapon for investment and financing.

2. Balanced investment

Before investing and managing money, we should first have a sense of risk. I found that many of his friends were pursuing high returns but could not afford high stakes. He always put all his money into stocks. He always felt that he could change his bicycle into a motorcycle but ignored the increased risks associated with high returns. As a result, he often experienced great joys and sorrows, was eventually trapped by the stock market and went to his friends' circle to complain about various complaints.

**（****Writer****：****Dick****）**