What is Interest?
Updated: Jun 27, 2022
Interest, when talking about investing, is a fee that is paid for borrowing money. I’ll never forget, when I was ten or so, my father telling me that money has a cost. Whatnow? What did he mean?
He wanted me to know that when someone borrows money, it costs something. Money isn’t free, (although it was for me, from him— thanks, Dad!)
But when someone wants to use someone else’s money, they owe the lender not just the money they borrowed, but also the fee for the right to use the money. And that fee is called Interest.
Isn’t it funny how there are all these words that mean one thing in the real world and a totally other thing in Finance?
Thanks, as always, for reading this!
Read about What is Money HERE.
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