Investing Tip #228: Compare the Effective Annual Rate on Bank Deposits

Interest rates are generally quoted as annual interest rates. Some banks compound or pay interest on a monthly, quarterly or half-yearly basis.

If you take into consideration the effect of periodicity, the effective annual rate works higher than the quoted annual interest rate. While investing, compare the effective annual rate on bank deposits.

If you want to learn more check out these resources:

• How to Build a Monthly Income Portfolio
• How to Earn More Interest on Your Savings

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