
Thanks for this project. I have been making the rounds watching videos on compound interest (CI).
It’s hard to get straight. Your discussion of the positive side of CI actually describes simple interest.
Compound interest adds interest back to the principle, uses that greater number as the new principle, then compounds interest on that higher amount. Thus:
The first month is the same, $100 principle, 10¢ interest.
2nd Month: $100.10 principle, 10.001¢ interest.
At the end of the year: the balance becomes $101.206622 CI vs $101.20 with simple interest.
Not even a penny difference at this low rate of return!
Suggestion: produce a 2 minute finance video and focus on simple interest vs compound interest using different APRs. Lynx