Try to tell us what you have already done, and what you don't understand about the definitions. This really isn't a teaching site for lack of room. If there's something specific you don't understand, we can help. If you don't want to learn basic definitions of the industry, nobody can help you. How could we explain how an internal combustion engine works if you don't know the difference in a crankshaft and a camshaft? There are no shortcuts to learning, and we can't learn for you.
Definition of 'Compound Interest'
http://www.investopedia.com/terms/c/comp...
Definition of 'Compounding'
http://www.investopedia.com/terms/c/comp...
Definition of 'Continuous Compounding'
http://www.investopedia.com/terms/c/cont...
Be sure to watch the accompanying videos.
Interest that draws more interest is compound interest.
Let's say you have $1000 and it draws 1% interest. That's $10. So now you have $1010.
The next month, the interest will be calculated on the $1010, figure. 1% of $1010 is $10.10 so now the amount is $1020.10. See how the interest gains interest?
Year one 10 % on $100 is $10
year two 10 % on $110 is $11
Compound interest is interest on your earned interest .
You place $100 down. Say you get 10% interest per annum making it $110
The following year you get interest on $110
so you get $11 interest. Meaning you now have $121.
The next year you receive $12.10 interest added.
and so on and so on.
What does it do when you have a mortgage or when you're investing? I really don't understand this please explain so that dummies like me can understand it lol:(
