Question 1

What is the difference between compound and simple interest?

Accepted Answer

Simple interest accrues only on the principal; compound interest reinvests each period's interest. 100k at 10% annually becomes 400k after 30 years with simple interest, but about 1.74M with yearly compounding — the gap grows exponentially over time.

Question 2

What is dollar-cost averaging?

Accepted Answer

Investing a fixed amount at regular intervals smooths market volatility and averages your cost basis — ideal for salaried investors and beginners. This tool's DCA tab simulates monthly contributions with monthly compounding.

Question 3

Why is long-term investing more stable?

Accepted Answer

Short-term market moves are unpredictable, but quality assets tend to deliver relatively stable returns over the long run. Staying invested smooths volatility and lets compounding work for you.

Question 4

How do I manage investment risk?

Accepted Answer

Higher returns usually come with higher risk. Diversifying across asset classes (stocks, bonds, real estate) reduces overall risk — only invest what you can afford to lose.