Introduction to interest | Interest and debt | Finance & Capital Markets | Khan Academy

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  • Опубліковано 21 кві 2008
  • Courses on Khan Academy are always 100% free. Start practicing-and saving your progress-now: www.khanacademy.org/economics...
    What interest is. Simple versus compound interest. Created by Sal Khan.
    Watch the next lesson: www.khanacademy.org/economics...
    Missed the previous lesson? Watch here: www.khanacademy.org/economics...
    Finance and capital markets on Khan Academy: This is a good introduction to the basic concept of interest. We will warn you that it is an older video so Sal's sound and handwriting weren't quite up to snuff then.
    About Khan Academy: Khan Academy is a nonprofit with a mission to provide a free, world-class education for anyone, anywhere. We believe learners of all ages should have unlimited access to free educational content they can master at their own pace. We use intelligent software, deep data analytics and intuitive user interfaces to help students and teachers around the world. Our resources cover preschool through early college education, including math, biology, chemistry, physics, economics, finance, history, grammar and more. We offer free personalized SAT test prep in partnership with the test developer, the College Board. Khan Academy has been translated into dozens of languages, and 100 million people use our platform worldwide every year. For more information, visit www.khanacademy.org, join us on Facebook or follow us on Twitter at @khanacademy. And remember, you can learn anything.
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КОМЕНТАРІ • 327

  • @WoodyWoodyATL
    @WoodyWoodyATL 9 років тому +428

    "Rent on money" This is the best definition I have ever heard about "interest"

  • @expertjacksonwilliams7368
    @expertjacksonwilliams7368 Рік тому +167

    Taking the first step is the hardest, but 7 house later living off passive income since June 6, 2016. You’ve got to start taking steps to achieve your goal.

    • @nathanjane7729
      @nathanjane7729 Рік тому

      I really want to start something for myself but the problem has always been not knowing where to start. What kind of investment would you advise? And what is the best way to follow it?

    • @justinscott6855
      @justinscott6855 Рік тому

      Thanks for your response but how do I get access to your financial consultant? Can you share more info about him if you don’t mind.

    • @bendickson9414
      @bendickson9414 Рік тому

      You can make a quick internet research with his name *JACKSON STEN MARSH*. The rest of the information is there for you to read and get in touch.

    • @hamad-to1rl
      @hamad-to1rl Рік тому

      Wow!!! I know and I have been growing with him since 2018. His expertise has been the best for my financial journey. I havpe created a passive income over the years and life feels really better and easy for me. I feel so delighted to read these good reviews about him

    • @Mathew-bp5bm
      @Mathew-bp5bm Рік тому

      That's a good decision if you start now. I invested in
      Stocks or Gold coins with the help of a Fin. consultant and was able to buy my second house last year September and hope to buy more if things keep going smoothly for me.

  • @fai411
    @fai411 4 роки тому +32

    When you said, "Rent on money" I was like hands down one of the best definition

  • @madwilli3205
    @madwilli3205 7 років тому +176

    They call it interest because people have no interest in loaning money for nothing. But the idea of receiving money on top of the money that they loaned makes the offer much more interesting.

    • @comedyman4896
      @comedyman4896 7 років тому +25

      interesting

    • @ezracyr4932
      @ezracyr4932 7 років тому +10

      interesting

    • @kommentieren52
      @kommentieren52 6 років тому +16

      Im not a native speaker and i took your comment seriously for way to many seconds.

    • @TrionityIr
      @TrionityIr 4 роки тому +9

      Tell that to those lending money with negative interest rates.

    • @izzylewis7835
      @izzylewis7835 4 роки тому

      u stupid

  • @Australiana432
    @Australiana432 9 років тому +85

    Thank you so much! I owe you a big part of my studies! Whenever I do not understand economics, statistics, math of finance, you are the one who helps me understand. So I wanted to say thank you!! You are an amazing Professor! Again very very thankful! :)

    • @ozgurkuzu2202
      @ozgurkuzu2202 6 років тому +1

      :)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))

  • @paul5324
    @paul5324 7 років тому +20

    There's a formula for simple interest: A=P(1+it) You learn this for the Actuarial FM Exam. A is amount value, P is the principal, i is the interest rate, and t is time. Compound would be A=P(1+i)^t

  • @CoreTendency
    @CoreTendency 12 років тому +6

    Khan Academy is like making a school from "for Dummies" books... which is extremely effective, logical, and interesting. He makes education more personal.

  • @SheilaDuffy1950
    @SheilaDuffy1950 12 років тому +1

    This is the best adult education I have ever imagined could help adults looking for classes regarding our interest in banking and purchasing a home.

  • @jemilagulston7742
    @jemilagulston7742 3 роки тому +5

    This would help me a lot before I start a finance and economics course

  • @tomlindsay7861
    @tomlindsay7861 2 роки тому +2

    Such a clear way of explaining a basic concept that is often over complicated. Thank you.

  • @adis24in35
    @adis24in35 5 років тому

    i swear this is how i had explained to myself, 'rent on money'! im 32 years old noob in finance...thats why sal hits the mark for even the uninitiated!

  • @ayasuliman6455
    @ayasuliman6455 5 років тому +9

    Thank you so much! 👏🏻👏🏻👏🏻 it’s really good lessons you are providing here without putting fees and that’s such a huge thing these days ☹️ many thanks 🙏🏻 even big professors can’t do what you’re doing. Really grateful ✨

    • @rosiepark8834
      @rosiepark8834 4 місяці тому

      Same. Better explanation then the professor in our school who get payed for bad explanation

  • @LyricalXilence
    @LyricalXilence 4 роки тому +14

    Good gracious, where did to the 3rd power stuff come from. Lost me with compound interest

  • @wcwyes
    @wcwyes 11 років тому

    I hear clearly, and after watching all of his videos up to this point in order, it completely makes sense that he would say that. Watch the series on compound interest and the number e and you'll see as well that it's true. If you don't I don't expect you to be arguing anymore since you would be arguing with lack of knowledge.

  • @mohamedisseahmed3827
    @mohamedisseahmed3827 8 років тому +2

    I am thankful to Khan academy. keep up your great work.

  • @Zander101084
    @Zander101084 13 років тому

    Sal, don't ever forget that you are the man!!!

  • @lonewolf2547
    @lonewolf2547 4 роки тому +1

    Its been 12 years, but still the best

  • @satyamrai2577
    @satyamrai2577 2 роки тому

    Sal is a gift to humanity.

  • @chatsociety
    @chatsociety 11 років тому

    Thanks for clarifying what compound interest is exactly.

  • @ANT9999
    @ANT9999 12 років тому

    this is the first time ive ever seen something educational on the education section on the youtube home

  • @blackswaneducation3509
    @blackswaneducation3509 12 років тому +1

    Very informative video! Very helpful lessons!

  • @VickiBee
    @VickiBee 7 років тому

    You could also teach it to people at Wells Fargo. I had a friend who dropped them cold over 5 years ago because she thought they were "the worst financial institution ever." She withdrew everything and told everyone who would listen about how they were the worst financial institution ever.

  • @rumit9946
    @rumit9946 14 років тому

    Anyone who plans on getting a loan should watch this. Very nice.

  • @VanyahaHeights
    @VanyahaHeights 13 років тому

    You rock! Thanks a lot! 10 minutes and it nailed me!

  • @silverphoenix125
    @silverphoenix125 3 роки тому

    Thanks for this! Great video!

  • @esseqaran7320
    @esseqaran7320 2 роки тому +1

    Rent on Money this the Best defination

  • @lalsthefreak
    @lalsthefreak 15 років тому +2

    heyyyyy great viddd! i LAV it to teach me all these n3w things!

  • @querylight6680
    @querylight6680 8 років тому

    Hello I stumbled upon this video when I was looking for your Share market and Stock and Options related videos, I could not find them anywhere on the channel . Can you help me locate the course or playlist. Thanks,

  • @FeniusAcademy
    @FeniusAcademy 4 роки тому

    Nice video. Very well explained.

  • @dunializama4677
    @dunializama4677 3 роки тому +1

    He teaches me more in 9 minutes than my teacher in a whole week and I think you for that

    • @dunializama4677
      @dunializama4677 3 роки тому

      Thank*

    • @bobpop_2520
      @bobpop_2520 2 роки тому +1

      then you have a preety bad teacher iguess

    • @greenchilistudioz4537
      @greenchilistudioz4537 2 роки тому

      @@bobpop_2520 Even my math teacher barely help me understand mad compare to my college semester professor, that is telling lol

  • @16yearoldwhiteboy
    @16yearoldwhiteboy 11 років тому

    Actually I believe he did say "now you've learned" I think he was referring to the Binomial Theorem. Look at his Pre-Calculus playlist, this is video 17 out of 44 in the playlist.

  • @mchen1025
    @mchen1025 11 років тому +2

    wow~ it's been 9 months already. Thanks!!

  • @etramway
    @etramway 14 років тому

    Well done!

  • @Jotto999
    @Jotto999 13 років тому

    Thanks very much!

  • @seanewing267
    @seanewing267 11 років тому

    Is this whereI would start to learn about finance in general? I know there are several finance-related playlists.

  • @wcwyes
    @wcwyes 11 років тому

    He did say and now you've learned and he was referring to the compound interest and the number e series.

  • @slamnxgirlxjulie
    @slamnxgirlxjulie 15 років тому

    your the best!!

  • @ajmichels14
    @ajmichels14 11 років тому

    If you are referring to 5:45 no. This is what you owe overall. 1st year- $110 2nd year- $120 etc. You do not pay that at the end of the year, that's how much you owe. Your principal is multiplied by .1 every year (which is the interest rate, 10%) until you pay the principal.

  • @Animalchemy18
    @Animalchemy18 14 років тому +1

    Do you have a touchscreen or are you just that good writing and drawing with your mouse? I notice you are using ms paint. anywhoo great stuff mate, keep it up and thanks!

  • @ChrisBurpee
    @ChrisBurpee 11 років тому

    Great video :)

  • @nadiakillen2761
    @nadiakillen2761 5 років тому +1

    How can you know so much Mr. Khan, thank you for the great explanations

    • @dragons10000
      @dragons10000 4 роки тому +1

      ikr, he covers every subject in school and uni, he is like 1 teacher university...

  • @nene-ur2cw
    @nene-ur2cw 7 років тому +3

    Lol actually hes one of the OG youtubers

  • @anoopsinghverma3393
    @anoopsinghverma3393 2 роки тому +3

    Legend are watching in 2022💥

  • @ThakvirReza
    @ThakvirReza 7 років тому

    Is there any tutorial about Project Feasibility Test Analysis?

  • @Soldier957
    @Soldier957 14 років тому

    I'd like to hear Sal's comments on the financial info in the Zeitgeist films.....

  • @anun9
    @anun9 11 років тому

    because every year you get 10% interest, meaning the final total of every year is 110/100 which 1.1.
    So with your principal at 100, with 10% interest in mind it is 110/100 x 100 = 110. For the second year you can either calculate it by 110/100 x 110 or (110/100)^2 x 100

  • @MrDevin666
    @MrDevin666 12 років тому +1

    This stuff is simple, BUT I have one question to ask for an answer. At 7:41 he changed it from 110 + 10%(110) to 110(1.1), where does that 1.1 come from?

  • @AnhvanLe
    @AnhvanLe 6 років тому +6

    There shouldn't be a "$" sign when calculating the interest rate. It should just be 10% instead of $10%

  • @hughie21
    @hughie21 13 років тому

    This guy is awesome

  • @thingsthatlooklikeotherthi5134

    👍Good Video

  • @saadabbasi2063
    @saadabbasi2063 10 місяців тому

    IS THIS PLAYLIST IN RIGHT SEQUENCE?
    It feels like it contains videos from different playlists, i am willing to take on this course. Any input would be appreciable.

  • @LNasterio
    @LNasterio 12 років тому

    OMFG ... we spend like 2x1hour lectrue on this.
    and did not make any sense at all.
    yet you spend 10mins and I totally got it...

  • @dog1648
    @dog1648 3 роки тому +1

    This was so informative thank you

  • @jet4432
    @jet4432 3 роки тому +1

    For me, the problem with trying to learn by watching videos like this is that I really lose the chain of thought when the person teaching something keeps going like: "t-the.. the.. now, er... the..." and things like that.
    But that's a pet peeve
    of mine

    • @greenchilistudioz4537
      @greenchilistudioz4537 2 роки тому

      Everyone learns differently, his crude drawings and writing are hard to read, but for someone that learns through demonstration, I find video pretty informative if only watch it and listen closely to what he explains, depends on your learning disability with translating what learning method they use to explain how to do it.

  • @wealthfundservicespvtltd954
    @wealthfundservicespvtltd954 7 років тому

    Well done;

  • @neethadenny1321
    @neethadenny1321 9 років тому

    very helpful

  • @sunilprajapat3660
    @sunilprajapat3660 6 років тому

    in simple interest rate, after each year it should be 110 dollars. same because principle is same and interest is also same

  • @himelkishorbarua1358
    @himelkishorbarua1358 6 років тому

    thanks a lot

  • @Hellsconsort
    @Hellsconsort 11 років тому +25

    Interest-ing!
    >_

  • @muhammedqizel2397
    @muhammedqizel2397 7 років тому

    thanks youre awesome

  • @tahntalus
    @tahntalus 6 років тому

    I wished sal would have used a new car loan as an example. Most car loans use simple interest thus making the illustration more practical. In his example sal is assuming the principle doesnt change, someone borrows $100 @ 10% interest and waiting x number of years to pay it back. No one does this most people will make subsequent payments over time thus reducing the principle.

  • @thirdplanet4471
    @thirdplanet4471 Рік тому

    I'm curious how the method 100(1.1)^10 would work of it was months instead of years

  • @stuff2681
    @stuff2681 10 років тому

    But very helpful.

  • @focusbiz1
    @focusbiz1 10 років тому

    THX :)

  • @mchen1025
    @mchen1025 12 років тому

    Please tell me what was the video before this video. You started this video by saying "well now you've learned what i think is quite possibly on of the most useful concepts in life, and you might already be familiar with it, but if you're not this will hopefully keep you from one day filing for bankruptcy" WHAT IS IT?!?!?! ANYONE, PLEASE! THANK YOU VERY MUCH!

  • @mechribelaid
    @mechribelaid Рік тому

    good presentation

  • @aznpwnsalot
    @aznpwnsalot 12 років тому

    A better explanation of interest. It is extra that you have to pay to match the money's value with what it will be as money loses it's ability to purchase over time. We see this in economics where milk may be only 50 cents in the 60s and is now 2-3 dollars. This is called inflation. When i give someone money, and they give me the same amount back, i lose out on what i receive, i've gotten less money because i can buy less stuff with it. To compensate for that loss, we use interest.

  • @jjackchung
    @jjackchung 4 роки тому

    Excuse me but what program are you using to draw?

  • @kphantom
    @kphantom 12 років тому +17

    My god! I can't draw a straight line with my mouse, how the hell does he write with it!

    • @deussivenatura5805
      @deussivenatura5805 3 роки тому +9

      Probably uses a drawing pad. Are you still alive btw?

    • @deussivenatura5805
      @deussivenatura5805 3 роки тому +1

      @Luh VA RIP Kamel . K . That's a good question, not sure if they did have drawing tablets existed in 2012 but I do remember having a P.DA at that time lol.

    • @xxtherealnubxx
      @xxtherealnubxx 3 роки тому +2

      yo you alive?

    • @fuji2070
      @fuji2070 3 роки тому +1

      @@xxtherealnubxx yea they should be they posted a video 4 days ago

    • @vishalsahoo4751
      @vishalsahoo4751 2 роки тому

      He is using a graphic tablet with a stylus

  • @badabing107
    @badabing107 10 років тому +6

    Yea I'm kind of unsure about the 1.1 also

    • @theTeamSlayer353
      @theTeamSlayer353 10 років тому +17

      0.1 is equal to 10 percent but if we just use 0.1 you're going to get just 10 percent of 100 (which is 10) we want 100 + 10 percent of 100 so we add 1 to 0.1 to get 1.1

    • @consuelafrazier8413
      @consuelafrazier8413 3 роки тому

      @@theTeamSlayer353 Thank you!

  • @jessicajumadiao3391
    @jessicajumadiao3391 6 років тому

    but why am i taught to use i=prt instead? with that formula we would jist compute the actual money with the interest... then we wouldnt really be getting the interest unless we subtract it to the principal money, right? but if we really want to get the interest asap we should just use i=prt. then again when looking for the actual money with its interest, we can use p(1+tr).

  • @scimotivateya9997
    @scimotivateya9997 2 роки тому +1

    The playlist is endless.😐

  • @akaalex6202
    @akaalex6202 2 роки тому

    bro who is this guy i’ve hear his voice like everywhere in the learning area

  • @GREJFilmsLtd
    @GREJFilmsLtd 13 років тому

    Note at 2:31 he writes 10/100 = $ 10%

  • @signonajoseph2351
    @signonajoseph2351 3 роки тому

    Thanks.

  • @Nickuncle
    @Nickuncle 11 років тому

    The notion that people think it's intelligent to argue about these things isn't even close to logical.

  • @Aman-jl3sy
    @Aman-jl3sy 4 роки тому +1

    who is here in 2020?

  • @TrionityIr
    @TrionityIr 4 роки тому

    I'm watching this because of the negative interest rates floating around which after watching this video, I am more certain that our financial lenders have gone mad.

    • @pugorod3050
      @pugorod3050 4 роки тому

      Negative interest is a useful tool for artificially stimulating the economy, which is hardly something new when it comes to keynesians. What you should actually be worried about is the systemic problems that have forced countries to take such drastic actions in the first place.

  • @aznpwnsalot
    @aznpwnsalot 12 років тому

    Interest to match the amount that we lost or more then the amount we lost to gain a profit. What this does is give us the incentive to let others borrow our money and delay our own consumption in hopes of being able to buy more in the future. If i lose money and i can't buy the game i wanted until next year, i will not be willing to lend someone the money.

  • @hwt2009
    @hwt2009 14 років тому

    i have a small inventory of bonds for sale.....do you have suggestions on how to find buyers?

  • @iNinjaNotes
    @iNinjaNotes 12 років тому

    @NoughNeaux Each year you pay 10% of interest on the NEW balance. So in year one you owe $100 + 10% which is $100 * 1.1 = $110 (since you owe the principal loan and interest). The reason he squares 1.1 is because he is trying to shorten the expression. For instance, in year 4 you would owe...$100 x 1.1 x1.1 x1.1 x1.1 = $146. But instead you can shorten that expression to $100 (1.1) to the power of 4. Since there are four 1.1's

  • @evasutherland603
    @evasutherland603 3 роки тому

    MSc. Accounting Vs Finance: Which Should You Study?

  • @iNinjaNotes
    @iNinjaNotes 12 років тому

    @MrDevin666 1.1 is the same as 10% interest rate on top of your initial investment which is 100%, 110% is equal to 1.1.

  • @ashleymtsac3679
    @ashleymtsac3679 3 роки тому

    Just in case. Is interest and interest rate the same thing?

  • @MrDevin666
    @MrDevin666 12 років тому

    @iNinjaNotes Yeah thanks for the reply, but I got it. He said that you undistribute the 110, which made no sense, he meant factor out 110.

  • @SomeoneWasHere94
    @SomeoneWasHere94 12 років тому

    Haha I kept thinking UA-cam was messed up with that Harvard video being on the home page.

  • @blad3oftheimmortal464
    @blad3oftheimmortal464 7 років тому +64

    Whos watching this in 2017

  • @lucifergaming2229
    @lucifergaming2229 5 років тому

    I have two questions, can somebody give me an idea please? suppose we have two companies in an industry i.e. 1) ABC 2) DEF. Let's say we have financial reports of both companies for 5 years. For each company i can find all the ratios for every year separately. suppose we are going to find a specific ratio i.e. liquidity ratio of both companies.
    Now my questions are: 1) How to find combined liquidity ratio for company ABC for 5 years?
    2) How we can calculate combined liquidity ratio of both (industry) companies (ABC and DEF)?

  • @vikramraghuwanshi9455
    @vikramraghuwanshi9455 3 роки тому

    whatis agreat explations.

  • @gaypikachu15
    @gaypikachu15 11 років тому

    where did 1.1 come from? how did the equation 110 + 10%(110) turn into 100(1.1)2= $121 ? answer me

  • @aakankshaa2703
    @aakankshaa2703 3 роки тому

    Thanks Khan Academy ❤️

  • @nikebobobradley-bull4657
    @nikebobobradley-bull4657 6 років тому +16

    2018: wohoo

  • @BillyBobTS
    @BillyBobTS 12 років тому

    @RealFngDeal Well said.

  • @MatiKase
    @MatiKase 12 років тому

    This is just funny how people think that we in Estonia are not very smart xD But now I can tell you ... If you didn`t know this you are actually not very smart, And that´s the truth :)

  • @educo-mr
    @educo-mr 8 місяців тому

    GOOD

  • @chadpearcy2582
    @chadpearcy2582 6 років тому

    Is there a quicker way to learn this.

  • @Kimjongil3000
    @Kimjongil3000 12 років тому

    Hooray! The Harvard video is gone!

  • @thybuilder
    @thybuilder 12 років тому

    @RealFngDeal Of course I believe in what I want, don't you ? I for one choose to believe in something that has enough proof to sustain it's argument.

  • @xdatgrlx
    @xdatgrlx 11 років тому

    Which is why we call it "faith" and not logic, unlike the big bang theory.

  • @lifeofgabe.0
    @lifeofgabe.0 Місяць тому

    what about tax on the buying