What is the compound interest on Trust Investing? How is it calculated? Why should you use it? In this article I'll answer step by step to all these questions. In bottom of the article I've added a calculator which allows you to simulate your earnings over time.
Compound interest calculation is one way to get passive income. The second is the revenues from the network (here the article in which I describe it).
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With this article, I am not forcing you to follow this strategy nor am I forcing or advising you in any way to sign up on this platform. I describe you a strategy that I have decided to undertake but which in fact does not necessarily suit you and your economic management.
What is compound interest
“Compound interest is the eighth wonder of the world. Whoever understands it earns it; who does not understand it, pays it " (Albert Einstein)
The compound interest is an investment method that has an exponential growth. This happens through the reinvestment of accumulated interest.
In simple terms?
Suppose you invest a certain capital of 100 euros. If that capital has an average return 20% month, after 10 months you should have 200 euros of accrued profits. If you also reinvest the interest at the beginning of the second month, you will find yourself with an average interest of 20% on 120 euros that is 120 + 14 = 134 euros. Got the trick? Reinvesting on accumulated interest means increase the invested capital and having an exponential growth.
If you always invest the same 100 euros after 10 months they would have (assuming an interest of 20%):
20 + 20 + 20 + 20 + 20 + 20 + 20 + 20 + 20 + 20 = 200 euros
If instead you invest the accumulated interest as well then everything changes:
20 + 24 + 28.8 + 34.6 + 41.5 + 49.8 + 59.8 + 71.7 + 86.0 + 103.2 = 519.17 euro
As you can see, there has been an accrual of capital greater than 100% using compound interest.
Where's the catch?
There is no trick. The difference between the two types of interest lies in the fact that, while in the first those 20 euros of interest are taken and used in another way, in the second the sum invested is considered as "lost" and continue to reinvest on the profits generated. It is clear: at best you have very high earnings, at worst those 100 euros go away. However, when it comes to investment, one rule must be clear:
You cannot invest more than you are willing to lose!
Everyone has their own budget whose loss does not change its life. For some it may be 10 euros for another 100 for others 1000, but the point is always the same: do not invest an amount whose loss can be a problem for you. On the other hand, everyone is free to invest as it sees fit. You can use a mixed approach, that is to say that not all the profits generated are reinvested but only a part and the remainder is withdrawn. For example, if I have interests of 100 euros, I can decide to reinvest a 60%, that is 60 euros and keep my 40.
But what does Trust Investing have to do with it?
Compound interest on Trust Investing can lead to a significant increase in your capital in the short term.
As you know, Trust Investing produces income in two ways: from Trading and from network, i.e. from the people you have invited or who are below you (here the article). Maybe you are not the guy who want to talk to other people on the platform or who simply do not want to spend time in this activity taking it away from something else. You would probably prefer a way that allows you to receive passive income with the least amount of time spent. Well, thecompound interest is for you. Even receiving earnings from the ONLY trading, you are able to accumulate a good monthly income.
In fact, Trust Investing has so far had revenues that fluctuated on average around 20% per month. Let's suppose for simplicity of calculation to buy a pack of 100$ (remember that the minimum is 15$).
Each pack has a life of its own and runs out once 200% is reached. This means that, with an average of 20% month, we would have recovered the spending and go into profit after the fifth month. Interest can be withdrawn at the end of each month. In the case of our 100$s, after the first 30 days we would have generated around 20$ of interest. If we took all the profit generated we would have a monthly income equal to about 20$.
But what if we also use 20$ instead?
Below is a practical example of using compound interest on Trust Investing.
Month 1: I buy a pack of 100$.
(100$ x 0.2) = 20$. I buy a pack of 15$.
(100$ x 0.2) + (15$ x 0.2) + 5$ = 28$. I buy a pack of 15$.
(100 x 0.2) + 2 x (15$ x 0.2) + 13$ = 39$. I buy a pack of 30$.
(100 x 0.2) + 2 x (15$ x 0.2) + (30$ x 0.2) + 9$ = 41$. I buy a pack of 30$
(100 x 0.2) + 2 x (15$ x 0.2) + 2 x (30$ x 0.2) + 11$ = 47$. I buy a pack of 30$ and a pack of 15$.
Month 12 :
(100 x 0.2) + 3 x (60 x 0.2) + 5 x (15$ x 0.2) + 4 x (30$ x 0.2) + 8$ = 103$. I buy a pack of 100$.
From the example it is clear that the amount you start from will be the same as you will have monthly after a year. At the 15th month (so 3 months after the first year), you will have an income of 160$, at the 19th the dollars have become 300. In less than two years you have a return monthly which is equal to 300% of the amount you started with.
By waiting patiently, you can get really crazy figures.
You may also decide not to use ALL the profits at the end of the month but a percentage. That way you would have less after 10 months, but you used some money before. The choice is yours! I recommend not withdrawing more than 30% and especially not before 10 months in order to create a small capital that works for you.
But what if I add something every month?
This process is called provision. Suppose you save a cup of coffee every day, and add another $ 30 a month beyond compound interest. In 10 months you can really get a rounding off at the end of the month, not bad. Below you can indulge yourself in choosing yours ideal accumulation plan.
I hope I have been clear and have made it clear what compound interest means on Trust Investing. Below is a useful calculator to help you take the best strategy, based on your spending power and your goal to achieve.