Article

Interest
June 07 , 2012

Interest is the annual charge you pay to borrow money, or the fee you get if you keep your money in Banks or Deposits. In case the charge / fee is paid out annually, there is no difference between Simple and Compound interest. But if the interest gets accumulated instead of being paid out, the interest in later years will be higher, since the interest of earlier years has also been added to the corpus.

In general:

  • Longer tenure and locked-in investments get you higher interest
  • More risky investments get you higher interest (so the next time you see a high interest rate being offered, be suspicious!)

Interest you get is taxed as income (pretty steeply!). Interest on home loan is allowed as an expense, but not any other interest that you pay

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