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How To Manage Funds When Switching Jobs?

The Change

It is said, “Change is the only constant”. Changing jobs can be exciting as well as stressful at the same time. Switching jobs is a daring leap for employees; it is a great time for them to take a break and sharpen their skills before starting their work again or grab another opportunity and choose self-growth and a better salary. 

Changing jobs comes with many challenges; employees may or may not have another job when resigning from their current working place. This change can prove to be a crucial one in an employee’s life. One must prepare for different processes, from resigning to joining another job. A few tips can help employees cope with this major life change.

Preparation for the change!

Managing personal finance while switching jobs is of utmost importance. Therefore, Money management tips can help employees plan their expenses until they join a new company and exercise their new role. It may also help them handle and control future expenses and organize their savings.

Employees looking for jobs and being the only provider to their families have to make sure that the money is enough to meet the expenses of the various needs of their families. Personal finance management tips will keep employees at ease. As preparation is important before any task,  the employees must manage funds before any significant change in their life.

Some money management tips are as follows:

●      Emergency Fund Set Up: unexpected expenses can pop up any time-unexpected! It is crucial to set up emergency funds to meet those surprise expenses. A lump sum of money reserved will cover expenses of payment to someone, hospital bills, or other transactions. If employees have some time before joining another company, these funds will pay for all their necessities without their usual paycheck.

The longer the downtime of the employees, the more the plans to manage funds.

If employees do not have an emergency fund set up, they can do so by stashing their money in a secured, high-yielding savings account rather than a traditional one.

●      Save for relocation expenses: Managing personal finance plays a vital role when employees need to cover the expenses of moving to a new place for their jobs. They need to fit in the packer’s and movers’ charges, pay rent, and deposit for a new home with all their other expenses. 

If employees cannot negotiate relocation stipends, they must keep these money management tips in mind. Employees may even consider taking personal loans from a trusted provider to cover their relocation expenses, as their interest rates would be lower than credit cards. Personal loans can provide flexible funding that could be used for moving and saving the employees other funds for other expenses.

●      Unused PTO Payout: Paid Time Off, unused PTO is the paid time off that an employee has earned while working at a company but not yet taken. Companies have an exit policy that compensates employees for any vacation days they didn’t take. 

This cash can be put into an employee’s savings account or used to cover relocation expenses. Snagging extra money could make employees happy and take some load off. Checking with the HR department regarding the unused PTO could ensure employees receive that sum for managing personal finance.

●      Paying back extra compensation: before handing over two weeks’ notice, employees must double-check the fine print for the relocation bonus or sign-on bonus and the agreed-upon terms, as the employees may have to pay it back. According to research, if employees received advance compensation, such as a sign-on bonus, and if it had a repayment agreement that had a specific timeframe, the employees are required to stay at the company for that agreed timeframe essentially; otherwise, employees must pay back the money. 

These kinds of perks are known as “golden handcuffs”, as these agreements may handcuff you to stay at the company longer. Employees may sometimes need to dig into their savings to pay off such compensations. These personal finance management tips may help the employees to be careful and double-check all the agreements and avoid a hit on their savings account.

●      Save login information for HSA and 401(k) accounts: If employees have contributed money to employer-sponsored accounts such as 401(k) or Health Savings Account(HSA), then they must ensure that they keep that data safe to claim that amount later for rollovers and withdrawals. 

According to research, it was observed that Americans left behind $1.35 trillion worth of 401(k) accounts and forgot about it. Employees must be aware of all these to manage funds.

●      Adjustment of budget to accommodate new salary: Employees must be conscious of their expenses. If the employees have secured a job that pays a higher salary than their previous job, they must consider saving up more or investing more in profitable sectors. If the current job pays a lower wage than the last company, then employees must cut down on some expenses. Managing personal finance becomes crucial when employees are unhappy with a budget.

To Wrap Up

Switching jobs is exciting but also comes with some significant challenges. If there are circumstances that employees must apply for a personal loan, then they must choose the best, keeping in mind their requirements to meet their expenses while switching jobs.

With all the above personal finance management tips, a personal loan can act as an extra helping hand to the employees to manage funds.

Tata Capital gives their customers an instant personal loan. It funds customers’ larger expenses without pledging any collateral. They offer a flexible loan tenure of 6 years, making loan repayment much more accessible. They provide affordable and unsecured credit up to Rs. 35 Lakhs at attractive interest rates.

Advantages of Tata capital’s loan are:

●      Multipurpose personal loan

●      No collateral/security

●      Overdraft Facility

●      Zero charges on part pre-payment

When can employees take a personal loan?

Some scenarios when an employee can avail of an instant personal loan are :

●      Debt Consolidation

●      Start a small business

●      Make a down payment

●      Cover relocation charges

Customers who can take these personal loans are:

●      Salaried Individuals

●      Students

●      Retired Individuals

How to get Tata Capital’s Personal Loan?

  • Step 1: Enter details(Name, Mobile number, verify PAN number)
  • Step 2: Input loan requirements- If pre-approved, input personal loan requirements within the sanctioned limit.
  • Step 3: Personal details (Enter personal details and banking details)
  • Step 4: Set up E-mandate- complete one-time net banking transaction authorization.
  • Step 5: Additional Facility – Avail insurance to safeguard against loan liabilities.
  • Step 6: Instant personal loan disbursement- Accept the e-agreement, verify personal details and get instant disbursement.

Documentation required is:

●      Photo identity proof

●      Income proof

●      Salary slips

●      Address proofs

●      Employment certificate

Visit the eligibility and documentation tab for more information.For more information, visit Tata Capital Personal loan.

How Can I Increase My Chances Of Getting A Personal Loan?

Personal loans are an effective way to counter a monetary emergency that comes about unabated and threatens to hamper the balance of an individual’s family. These also come in handy when individuals run short on cash but have some planned expenses, such as marriage, vacations, or medical emergencies. While they are helpful in many situations, the difficulty in getting a personal loan proves to be a difficult nut to crack for most. 

This article discusses some invaluable tips that can boost an individual’s chances of getting a personal loan.

Why are personal loans so popular?

Before getting into the nitty and gritty of the chances of getting a personal loan, it is imperative to understand why they have become so popular with time. One of the main reasons is that personal loans are unsecured. It means even those who do not have enough collateral to raise money can get it. Additionally, the documentation is more streamlined because of the lack of collaterals, making it less hectic for both the borrower and the loan provider. In most cases, personal loan interest rates are fixed. It means they do not vary, unlike other funding methods, such as housing loans and credit cards. It ensures that the borrower knows how much to pay periodically while enabling them to track their payments seamlessly. Personal loans have no limits on how the borrower can use them. From marriages to home repairs to debt consolidation, an individual can use the money for many purposes. Personal loans can be obtained easily, but loan providers often turn down applications. 

How can people increase their chances of getting a personal loan? 

Things to do to increase the chances of getting a personal loan

Approval of a personal loan depends on many factors, making it a tricky affair. 

  • Work on improving the CIBIL score

Providers often consider an individual’s CIBIL score when approving or rejecting their loan request. The higher the score, the higher the chance of accepting the personal loan request.

For that, the applicant can check their reports to see if there are any errors. Even the most minute errors, such as incorrect credit limits and account details, can have a massive dent in the CIBIL score. If so, they can collect the necessary evidence and raise a dispute to help clean their credit history to improve their CIBIL score.

  • Manage payments better

Borrowers must be careful about outstanding debt timely repayment. It would also help to pay more than the minimum amount whenever possible. Borrowers can improve their credit utilization ratio and their chances of getting a personal loan.

  • Track FOIR

A high FOIR or fixed obligations to income ratio can reduce an individual’s creditworthiness when they apply for a personal loan. Even when the approval is not an issue, the lender may charge a higher interest rate to minimize their risk of default. A FOIR ratio between 40% and 50% is usually considered healthy for new loan approval.

  • Do not apply for too many loans at once

People often seek a personal loan in a state of emergency. In such a crunch period, people usually end up applying to multiple lenders hoping to get something from at least one of them. But that is counterintuitive. Every loan application results in a hard inquiry and can cause a dent in the applicant’s credit score. 

  • Be careful while choosing lenders

Rising credit players in India mean people have many options to choose from while applying for a personal loan. Some promise easy repayment terms and interest rates to woo the individual into a credit trap. So, it is imperative to conduct thorough research even when the situation is dire rather than fall into a risky situation. Loan givers often run several offers, and the applicant can benefit from them if they research before applying for a loan.

  • Add a co-signer

For those with an average credit score, having a co-signer or a co-borrower, such as their parents or partner, can strengthen their chances of getting a personal loan request approved. The co-signer will have an equal liability to repay the loan, and if their credit score and income are on the higher side, the loan provider may be more inclined toward approving the request. 

  • Check the eligibility criteria set by the lender

Once a borrower has chosen a lender, the next step is to check their eligibility criteria. While the differences may be minimal, the borrower may find an edge while applying. It will also protect the applicant from the pitfalls of rejection because of trivial reasons such as age. 

If an individual meets the lender’s minimum qualifications, it will allow them to pre-qualify for a personal loan, which can significantly boost their chances of getting the request approved.

Apply for a personal loan with Tata Capital

In most cases, applicants may not have enough time to level up their application immediately when the need for a personal loan arises. So, they must perform specific actions to increase their chances of securing the loan upfront. Follow these tips to ensure quick approval.

At Tata Capital, we understand that people may be going through financial emergencies when applying for a personal loan. We offer affordable and unsecured credit coupled with easy-to-meet eligibility criteria to be the partner they seek during difficult times. 

Also, we have a flexible loan tenure of up to six years to minimize the burden on the borrower’s pocket. Click here to learn more about Tata Capital’s Personal Loan facility.

How To Reduce The EMI Of Your Existing Personal Loan?

“Timely return of a loan makes it easier to borrow a second time”. This Chinese proverb very rightly captures the true essence of a loan.

Since the Covid-19 pandEMIc, the demand for credit, especially personal loans, has surged in India. Personal loans emerged as the third-most availed retail loans in FY21 in the country, accounting for 11.7% of the category loans disbursed in the last fiscal year. 

A personal loan can be used for various purposes, such as for meeting wedding expenses or medical emergencies. It can also come to the rescue when one needs to go on an unplanned trip, finance their child’s education, or renovate their home! A personal loan can be used for any individual purpose.

Taking a loan at times is essential, and so is its repayment. And the good part about this is that there are a number of ways to reduce EMI liability, and as an aware borrower, one must know and make use of them. But how to reduce the EMI of a personal loan?

Worry no more! In this article, we bring you the best tips on reducing the EMI of existing personal loans. Read on to know more!

6 Tips on How to Reduce EMI of Existing Personal Loan

Given below are the six most effective ways will help one know how to reduce personal loan EMI:

1. Make Sure the Loan Amount is Right

The Equated Monthly Installment (EMI) of a loan is directly proportional to the personal loan amount. That is, one needs to pay a certain percentage of the loan and interest as the EMI. Therefore, if the borrower has taken a personal loan of a higher amount, they need to pay a higher EMI and vice versa.

One of the most fundamental, straightforward, and practical answers to the question of how to reduce the EMI of a personal loan is to choose the loan amount correctly. One must remember that one should borrow only the necessary amount. People often get swayed away and take a higher loan than required just because their credit score allows it.

Remember not to do so because this can unnecessarily increase one’s debt liability. Always plan your expenses and avail of a personal loan, the repayment of which fits your budget comfortably.

2. Select the Loan Tenure Correctly

Another effective way in which one can resolve their concern on how to reduce personal loan EMI is via loan tenure. The amount of EMI payable by one for the repayment of their loan inversely depends on the term of the loan. That is, the longer the tenure, the lower the EMI value; the shorter the tenure, the higher the EMI amount.

Thus, if one cannot afford to pay massive amounts as EMIs, they must go for a longer tenure. This helps keep the EMI payment within the budget without worrying about how to make ends meet.

3. Make Use of a Personal Loan EMI Calculator

Nowadays, it is highly convenient and quick to get a personal loan. However, one should never make a financial decision in haste. It is always advisable to do all the financial calculations beforehand and then avail of credit. Also, this is one of the easiest tips for reducing the EMI of an existing personal loan!

One must calculate their EMIs before taking a personal loan. This can be done quickly and instantly using our Personal Loan EMI Calculator. All one needs to do is enter the amount of personal loan they wish to avail, the loan tenure, and the rate of interest payable on the credit. And the EMI amount will be displayed! 

Using the personal loan calculator is very useful as it helps one to know their EMIs, avoid the risk of manual calculation errors, and make an informed decision about their finances.

4. Pay EMIs on Time and Without Fail

Are you still wondering how I can reduce my loan EMI? Don’t worry. This can be done one more way – by paying EMIs on time! Now, how does paying EMIs on time affect the EMI amount?

This is because the interest one pays on a loan depends on the creditworthiness captured in their credit score. If one fails to pay their loan EMIs on time, this would reduce their creditworthiness for the lender and degrade their credit score. And this may result in a higher interest rate on future loans.

Moreover, a delay in the payment of personal loan EMIs may attract late payment penalties by the existing lender. One can avoid missing their EMI due date using an automatic payment mechanism with their bank. However, it is necessary to ensure an adequate balance of funds in the bank account at the time of the EMI due date.

5. Merge Multiple Loans Using Personal Loan

One often takes multiple loans from different lenders to fulfill their financial requirements. However, this can be difficult to manage plus expensive on the pocket as different interest rates may be chargeable on other loans. 

Well, one way to do away with handling multiple loans is by taking up a personal loan. One can use a personal loan to pay off the existing loans so that they have only one outstanding credit.

This helps in better management of credit, payment of only one interest rate, and a lower probability of missing out on the EMI due date.

6. Choose Personal Loan Reducing Rate of Interest

If you often ask yourself how can I reduce my loan EMI? Then you must know that there are primarily two ways in which the interest rate can be levied on a personal loan – a flat rate or a personal loan reducing interest rate. Under the flat rate, the EMIs get calculated at the time of loan sanctioning based on the total loan amount.

However, under a personal loan reducing interest rate, the EMIs are calculated basis only on the outstanding loan amount. That is, this rate of interest takes into account the repayments made towards the availed loan. Choosing the reducing rate of interest can thus help one reduce their EMI liability.

Conclusion

A personal loan is a great financial tool that helps one meet both expected and unexpected financial obligations. And there are various ways, as listed above, in which one can reduce their personal loan EMIs. But, if you are still wondering how to reduce the EMI of an existing personal loan, then feel free to get in touch with the professionals at Tata Capital. Or visit our website to learn more about personal loans!

Hero Vida V1 Pro Price – Range, Specifications, Images & More

Few vehicles come close to the convenience of a gearless scooter, especially on busy urban roads in the country. There is no need to hold on to the clutch or change gears. Just accelerate and cruise through the traffic. Scooters also have decent storage units making them popular among daily commuters. 

But like other automobile segments, the two-wheeler market is also seeing a demand for clean transport. In fact, e-scooter manufacturers have sold more than 3 lakh units from April to October 2022. The latest e-scooter to enter the Indian two-wheeler market is Hero MotoCorp’s Vida V1 Pro. 

If you are looking for a detailed overview of Hero Vida V1 Pro, you are at the right place. Read further to learn about the Vida V1 Pro’s price, range, specs, and more. 

Hero Vida V1 Pro Launch Date and Overview

Hero launched its much-anticipated e-scooter on 7 October 2022. The e-scooter is available in two models: 

  • Vida V1 Plus
  • Vida V1 Pro

The Plus model is the base variant, while the Pro model is the top-end model. 

At the front, the Vida V1 Pro electric scooter gets LED headlamps and LED DDRLs. Similarly, the rear end gets two-LED strips for the taillight, creating an intertwined pattern. The e-scooter resembles any contemporary petrol scooter, but design elements, curves, edges, accents and an exposed handlebar give it a distinct e-scooter look.

Hero MotoCorp has gone with a pastel colour scheme that compliments the design of the e-scooters really well. The e-scooter is available in three colours:

  • Matte White
  • Matte Sports Red
  • Matte Abrax Orange

The two variants are very similar and have the same body, design, colours and features. But, the Hero Vida V1 Pro gets a bigger battery and slightly faster acceleration than the base model, making it the better version for many riders. 

Hero Vida V1 Pro Price

Hero has priced its e-scooter competitively, offering the Vida V1 Pro at Rs 1.59 lakhs (ex-showroom). While the base model, i.e., The V1 Plus, is priced at Rs 1.45 lakhs. See the table below for detailed pricing.

See the table below for the detailed breakdown of Hero Vida V1 Scooter’s Price

Hero Vida V1 Price (ex-showroom)Rs 1,59,000
InsuranceRs 6,747
Regional Transport OfficeRs 1,500
Hero Vida V1 Pro on-road priceRs 1,67,247.

After adding insurance, the Hero Vida V1 Pro on-road price comes to Rs 1.67 lakhs. It is important to note that the above on-road pricing is based on Delhi’s insurance and RTO expenses. Depending on your city, the on-road price may vary. Besides, the Plus variant costs around Rs 1.49 lakhs. 

Vida V1 Pro Features

Hero Vida V1 Pro electric scooter is a modern two-wheeler with loads of unique features that make driving fun and convenient. There is no analogue instrument cluster. Instead, you get a 7-inch TFT touchscreen with decent brightness, even for a sunny day. The display has Bluetooth, 4G and Wi-fi connectivity to connect smartphones and enable features like geofencing, remote start, turn-by-turn navigation, and more.

But most of these features are available on competitor e-scooter as well. Here are some exciting features that make Vida V1 Pro a unique e-scooter:

  1. Swappable Batteries

With Hero Vida V1 Pro electric scooter, you get two battery packs. So, you can equip one battery to the scooter and store the second for when the first battery drains. 

  1. Modular Storage

The storage compartment below the seat is modular and split into two sections. The rear section provides ample storage for a helmet and other small items. The section at the front is for storing the additional battery pack and some small items like a smartphone and a few documents.

  1. Safety and Security Features

The Vida V1 Pro has safety features like an anti-theft alarm, a dedicated SOS button, and a Find-My-Device. You also get reverse assist, vehicle diagnostics, and follow-me headlamps. All electronics are waterproof with an IP65 rating. The e-scooter also gets turn indicators at the front to make your turns safer.

Hero Vida V1 Pro Specifications

Hero MotoCorp has equipped Vida V1 Pro with some of the segment’s most amazing motors and batteries. The battery and the motor are waterproof, making these new e-scooters all-weather two-wheeler. 

See the table below for detailed specifications, including Hero Vida V1 Pro’s range, top speed, charge time, and more.

Hero Vida V1 Specifications
DimensionsLength: 1,861 mmWidth: 710 mmHeight: 1,164 mmWheelbase: 1,301 mm
Weight125 kg
Motor6 kW electric motor
Torque25 Nm
Motor IP ratingIP68
Battery pack2 swappable lithium-ion batteries
Battery capacity3.9 kW
Battery IP rating IP67
Charging time5 hours 55 minutes
AccelerationThe Vida V1 Pro cruises from 0 to 40 km/h in 3.2 seconds
Hero Vida V1 Pro top speed80 km/h
Hero Vida V1 Pro rangeThe V1 Pro can travel up to 165 km on a single charge (This range is based on tests and not real-life conditions so your Hero Vida V1 Pro’s range may vary depending on your ride style, traffic, and road condition)
Brakes The e-scooter has disc brakes at the front and drum brakes at the rear
SuspensionsTelescopic fork at the front and single rear shock absorber
Wheel Type12-inch alloy wheels 
Tyres90/90 section tubeless tyre at the front and 100/80 section tubeless at rear 

So, should you buy the Hero Vida V1? 

If your daily commute is within the Hero Vida V1 Pro’s range and you want a faster e-scooter, The V1 Pro is a perfect fit for you. It is also perfect for daily commuters like office and college goers. If you live in Bengaluru, Delhi or Jaipur, you can book the e-scooter on Hero MotoCorp’s website for Rs 2,499. Deliveries will begin in the second week of December.

Wrapping Up

The Hero Vida V1 Pro carries a higher sticker price than most petrol vehicles. But in the long term, it will save you the money you would otherwise spend on fuel and maintenance. So, do not delay your purchase and finance your brand-new Hero Vida V1 with Tata Capital’s two-wheeler loan.

At Tata Capital, we offer two-wheeler loans of up to Rs 2.85 lakhs and finance up to 100% of your new vehicle’s cost. You can easily repay your loan with tenures of up to 60 months and the lowest interest rates. Visit the Tata Capital website to know more.

Know About The Compound Interest Rate – Definition, Formula & How It Works?

The proper knowledge and prudent management of personal finances play an important role in wealth appreciation and financial analysis. Besides giving you a sense of independence, it also helps you plan your finances according to your financial goals. 

A key aspect in this regard is the rate of interest. Whether one is paying it on the availed credit or receiving it on the money invested, it is important for one to know not only how much is it but also how it is calculated and how it compounds.

The power of compounding is considered highly important for wealth appreciation. So, what is compound interest or what is the meaning of compound interest? What is the formula of compound interest? How does compound interest work? Let’s find out the answers to all these questions and many more!

What is compound interest Rate?

So, let’s begin by answering the most basic question in this regard – what is compound interest? or what is the compound interest definition?

Well, compound interest refers to a cumulative interest amount calculated on the principal deposit/loan amount and the interest earned/payable on it during its tenure. It is a very powerful formula in the sense that it calculates interest even on the accrued interest. This way, it makes the principal amount grow exponentially!

The effect of compounding depends on two factors namely the rate of interest and the frequency of compounding. The higher the interest rate and the higher the frequency, the larger would be the effect of compounding. Interest rates can compound at any frequency such as yearly, half-yearly, quarterly, monthly, weekly, bi-weekly, or even daily!

It is beneficial for investors to invest in financial securities or instruments that offer compound interest as this allows them to earn interest even on the interest earned by them in the preceding period.

However, for borrowers, it is not beneficial to pay compound interest. As this can lead them into a never-ending spiral of debt!

What should be the annual rate of compound interest?

Another interesting question that one must ask is what should be the annual rate of compound interest. Well, there is no correct answer to this question! The higher the interest rate the better it is when one is the investor. However, the lower the compound interest, the better it is when one borrows funds and needs to pay interest on them.

How to calculate compound interest?

After knowing what is compound interest, it’s time to understand what is the formula of compound interest. 

what is the formula for calculating compound interest?

Compound interest can be calculated using the below-mentioned formula – 

Compound Interest =  P(1+r/n)^nt – P

Where,

P = Principal amount

r = Rate of interest in percentage terms

n = Number of times the interest is compounded in a year

t = Tenure of deposit/loan

Let’s understand how compound interest works with the help of an example – 

Mr. A deposits Rs. 50,000, which bears a compound interest of 10% per annum and a tenure of 5 years. So, what is n in compound interest for Mr. A, it is 5.

Compound interest earned by Mr A after 5 years = 50,000 (1+0.1/1)^(5*1) – 50,000 

= Rs. 30,525.5 

However, if his deposit attracted a simple interest of 10% per annum for 5 years, then he would have just earned an interest of Rs. 25,000.

Simple interest earned by Mr. A after 5 years = Principal Amount * Interest Rate * Time Period =50,000*0.10*5 

= 25000 

How to use a compound interest calculator?

After knowing what is the formula of compound interest, let’s learn what is a compound interest calculator and how it works.

A compound interest calculator is an online tool that lets you calculate the compound interest on your investment instantly and in an error-free manner. One can use the Tata Capital Compound Interest Rate Calculator using the below-mentioned steps for making a sound financial decision – 

Step 1:Type-in your investment amount. Make sure you have entered the lump sum amount at this stage.

Step 2: Selected your expected rate of interest from the given range of 1%-30%. You can easily find this interest rate online for the investment option that you are considering.

Step 3: The final step requires you to select your investment tenure. We provide a range of 1-30 years, choose the number that matches your investment horizon.

That’s all. You are done! Once you complete the above-mentioned steps, the future value of your investment will be displayed on the left along with the estimated value for your investment gains.

How to Make the Most of compound interest?

One can make the most of the compound interest with their investment in two ways. One way to leverage the compound interest rate effect is to opt for a longer tenure. With more time, the interest gets compounded more frequently and thus helps one have a larger investment corpus.

The second way to make the most of the compounding effect is by keeping increasing the invested amount at a defined interval. Or, one can choose not to make withdrawals from the investment to keep the invested amount large and so does the effect of compounding.

Wrapping Up

It is good to know varying personal finance terms inside out for robust financial planning. But, it is always better to seek expert advice for your finances. For more information on what is compound interest or how compound interest works, feel free to reach out to experts at Tata Capital or simply visit the website to know more!

FAQs

Q1. What is the meaning of compound interest?

Compound interest simply means an interest rate that takes into account the effect of compounding. That is it pays interest even on the previous compounded interest along with the principal.

Q2. What is the formula of compound interest?

If you are wondering what is the formula of compound interest, then here it is –

Compound Interest =  P(1+r/n)^nt – P

Q3. What should be the annual rate of compound interest?

It’s quite often for people to ask what should be the annual rate of compound interest. However, there is no defined answer to this question. Still, for investment purposes, a compound interest rate would lie in the range of 7%-10%. However, the higher it is, the greater the effect of compounding.

Q4. How does compound interest work?

So, how does compound interest work? The simplest way to understand how compound interest works is by thinking of it as an interest rate that is also applicable to the previous interest earned by you towards an investment.

Q5. What is n in compound interest?

One of the most common questions people have is what is n in compound interest? Well, n refers to the number of years for which the investment has been made or the loan has been availed. One earns the compound interest rate during the entire period defined by ‘n’.

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