Editing 947: Investing
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==Explanation== | ==Explanation== | ||
− | {{w|Compound interest}} is a type of {{w|interest}} in which the interest earned is added to the total amount, so that the interest itself then begins to gain interest | + | {{w|Compound interest}} is a type of {{w|interest}} in which the interest earned is added to the total amount, so that the interest itself then begins to gain interest. This contrasts to {{w|simple interest}}, where the amount used to calculate the interest will always stay at a fixed value. In economics classes, many teachers like to demonstrate extreme examples of compound interest, typically turning a thousand dollars into tens of thousands thanks to unrealistically high interest rates over several decades. But here, Ponytail discovers that a more realistic example is less than overwhelming. |
− | There is an urban legend that Einstein said that compounding interest is the most powerful force. | + | There is an urban legend that Einstein said that compounding interest is the most powerful force. [http://www.explainxkcd.com/wiki/index.php?title=250 Snopes] has its [http://www.snopes.com/quotes/einstein/interest.asp doubts about it]. |
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==Transcript== | ==Transcript== | ||
:Ponytail: Sure, 2% interest may not ''seem'' like a lot. But it's ''compound''! | :Ponytail: Sure, 2% interest may not ''seem'' like a lot. But it's ''compound''! | ||
− | :[Ponytail | + | :[Ponytail opens a computer and begins calculating.] |
:Ponytail: If you invest $1,000 now, in just ten short years you'll have... | :Ponytail: If you invest $1,000 now, in just ten short years you'll have... | ||
− | + | :...let's see... | |
:Ponytail: ...$1,219. | :Ponytail: ...$1,219. | ||
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[[Category:Comics featuring Ponytail]] | [[Category:Comics featuring Ponytail]] | ||
[[Category:Math]] | [[Category:Math]] | ||
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