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How does compounding works?

April 26, 2017compounding

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How does compounding works?

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Normally if you do not use compounding (0%), your daily interests will be available in your account balance. If you set your compounding rate to more than 0%, then that percentage of your daily interests will be added to your principal instead of account balance. This means that you will be able to withdraw less money today, but you will earn more daily profits in the future. For example, if you invest $1000 on 4.2% daily plan, you will earn $42 interests per day. If you set your compounding rate to 50%, then $21 will be credited to your account balance, while another $21 will be added to your principal. Your principal is now $1021, and you will earn $42.88 the next day. After the plan ends, your principal will be credited to your account balance, depending on how much you compounded. This is a good way to maximize your profitability if you do not plan to withdraw every day.