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Does compound interest have more of an impact on short term investments or long term investments?...

Does compound interest have more of an impact on short term investments or long term investments? Do you think it’s possible to have uninterrupted compound growth?

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Expert Solution

Compound interest is the interest that you earn on the interest that you have gained. In short, it is interest on interest. This differes from simple interest where there is no interest on interest. Higher the interest, more is the compounding effect. Hence, compound interest has more of an impact of long term investments.

It is possible to have uninterrupted compound growth when the compound frequency is continuous is. when the initial amount is compounded continuously, it leads to higher effective rate of interest.

jeff jeffy answered 3 years ago
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