00:01
So here we're talking about interest.
00:02
And the idea is how to increase interest, right? we want to increase interest over time, right? so we want multiple increases, plural, right? so interest repeatedly, right? you see how this increases plural.
00:24
So let's think about each of these.
00:26
A higher rate.
00:31
So imagine that we have $1 ,000 at 4 % and no compounding.
00:41
And so now what our interest would be 40, 40, 40, and so on, so on forever.
00:51
Suppose that you got 6 % instead.
00:53
Well, if you got got 6%, you'd now have 60, 60, 60.
00:57
It doesn't generate repeated increases, right? you can't get higher interest rates.
01:04
And so, right, so this is not a good answer.
01:07
Cannot always raise rate, right? to get significant increases in interest, you would need to constantly raise the rate.
01:17
That's just not plausible.
01:18
B, higher principal.
01:22
So imagine that we have, say, again, 1 ,000 at 4%...