4 Basics of Finance Every Freshman Should Know

The post teaches the basics of finance, every college freshmen should know. The first principle is known as “Time Value of Money”. It says, the surplus worth of money will always appraise if spent wisely. Perpetually growth of your investments is in your hands. it depends on how you invest.

The second basic principle of finance is “Compounding”. Albert Einstein once called “The Power of Compounding” the eighth wonder of the world. At the age of 22, an average investment of $10,000 will mushroom to $58,714 by the age of 45(Compounded at 8% annually). One who understands this will unveil it forever, one who doesn’t will pay till infinity.

The third basic principle is “Leverage”. In layman terms, Leverage means investing borrowed capital for potential increment upon return on investment. A good example of leverage could be College Education.

The fourth principle is about “Inflation”. It marks the general increment of price vs fall in purchase value of a commodity over time. For example: A Howard degree costs 17 times higher as compared to 1971-72.

The infographic below is a visual depiction of the 4 Basics of Finance Every Freshman Should Know.

basics of finance, every freshmen should know

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