Compound Interests: Three Helpful Facts

To be honest, I've never heard of compound interests except when I tuned in the news and a UK insurance scandal came up. It would seem many affected had better refunds from the mis sold product because of compound interests.

But it didn't help that compound interests had a negative impact with me. As I learned when I got my first personal loan for a car, compound interests were a friend and foe.

Majority of times, however...

Compounding Is a Friend

Compound interests on paper look like they just achieve some small amounts at every turn. For example, a £2000 deposit could only earn about 3pc even on high-yield savings accounts. Well, for the first year alone.

But if you think about it, the more money you save, the more it begins to make sense.

Growth For Years On End

If you have a £2000 contribution at the age of twenty or even 30, you could expect a return of £90,000 by the time you retire with an average 8pc annual return. This is an ideal outcome if you never touch your money.

Earnings really begin when you reach your twentieth year of paying for your investment, or the twentieth year of leaving it alone with your bank.

Making It Work For You

Of course, the catch is saving enough money to contribute to your compound interest-laden account. If you can save a large amount, depositing it immediately will earn it higher yields. 

The more profit it earns, the higher amounts you get. Making it work for you simply just means living below your means and starting to save money as early as possible.

Tips On Rebuilding Your Credit Score

Credit reports impact your credit score, and the reports contain the financial activities you’ve done for the last quarter or year. Your score will affect your ability to gain credit and approval for loans, mortgages or credit cards with low interest fees. You’ll be paying higher bills or get rejected if you have a poor score that instantly puts you in the high-risk category. Here are a few ways to rebuild your credit scores. 

1.     Use Your Credit Card

If your debts are not too heavy on your credit cards, resign all but one of your credit cards. Ensure all resigned credit cards have no debt. Now, this single credit card’s purpose is to help increase your credit score. Use it to purchase small-priced items or items that your actual money could afford to pay on time and in full. A good performance in paying your credit bills on time can boost your credit score.

2.     Develop Good History

A good financial history is reflected by the length of time your credit is in good standing with another creditor. With a low-balance credit card fully paid on time and in full every month, your good history develops over time. By a year, you could upgrade your credit status to a good standing that could get you an average-interest loan from a high-risk, high-interest one.

3.     Separate Supplementary Accounts

If you’ve recently had a divorce or if you have shared properties with a business or company you owe, separate these supplementary accounts legally. Supplementary accounts allow other people or establishments to use your line of credit, which can affect your score when things get sour.

4.     Correct Inaccuracies

If you could correct any erroneous or outdated information listed in your credit reports, a good credit score boost may just be in the corner. Initiate a dispute  whenever necessary and don’t be afraid to use this legal right.

5.     Avoid Bankrputcy

When you’re deep in debt, avoid filing for bankruptcy if you still have a capacity to earn money. Bankruptcy is for people who are retired, disabled and unable to get income because of their incapacities. Even if 80% of your income goes to your debt, to protect your credit score, avoid bankruptcy filing.

The Common Mistakes Couples Make With Their Finances

It is inevitable that couples tend to fight about money. It is one of the most common things married couples fight about. And it's found out that it's one of the reasons why some marriages lead to divorce. It may seem like talking would do the trick but in reality, it transcends that. There are a few ways to avoid these financial mistakes. All you have to do is learn from the common ones that couples make with their finances.

1. Separating your finances
Once you're married, the adage, "What's yours is yours and what's mine is mine," would no longer be applicable. Maybe at the beginning of a marriage, it's okay to have separate accounts. However, in the long run, when married couples have children, it can be quite difficult to separate expenses and maintain financial equality. What couples must really do, though, is to start managing their money as a couple from the start of their marriage. This would avoid further problems later on.

2. Ignoring debt management
The best way to resolve a debt is to combat it together - like a joint debt. If you have a hands-off approach to your spouse's debt, then that would further plunge you into trouble and would lead to more arguments.

3. Keeping financial secrets
Spending money behind your partner's back is a huge no-no. It would just cause them to have feelings of resentment and mistrust. You have to be open to your partner about financial matters.

4. Not having a budget
As individuals, we have to create our own monthly budget in order for us to keep track of our spending, too. This is just the same with married couples. This gives them a clearer view of their financial status. It gives them an avenue to discuss future investments.

5. Not talking and considering financial investments
Married couples must have a long-term investment plan in mind. This could prove beneficial to them in the long run. This could assist them with their children's education and ease in with other expenses such as mortgage. This should enable the couple to obtain joint financial success.