What Students Need to Know About Interest Rates When Investing – Red Bluff Daily News

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Students who wish to invest a portion of their earnings should know more about interest rates. Learning the basics of simple interest and compound interest will help them make better investment decisions, according to KHEAA.

In a savings or investment account, you might receive a compound interest rate, which means you don’t just earn interest based on a percentage of your initial deposit; you earn interest based on a percentage of your initial deposit plus a percentage of the interest you have already earned.

If you make an initial investment of $ 10,000 at a compound interest rate of 3%, compounded annually, you will have $ 18,061 in your account in 20 years and $ 32,620 in your account in 40 years – your money. will have more than tripled without you touching it. this. Without compound interest, if you only earned $ 300 in interest each year on your initial $ 10,000 investment (simple interest), your account would only have grown to $ 16,000 after 20 years and $ 22,000 after 40 years.

KHEAA is a public not-for-profit agency created in 1966 to improve students’ access to university. It provides information on financial aid and financial literacy at no cost to students and parents.

The agency also helps colleges manage their student loan default rates and verify information submitted to the FAFSA. For more information on these services, visit www.kheaa.com.


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