Interest is the cost of using someone else’s money or the return you get from letting someone else use your money. The interest rate will vary depending on the risk involved as well as the inflation rate.
The interest rates and returns to savings have varied over time. In the last decade, interest rates have been some of the lowest in history. Recently a 4 year auto loan would vary from 3.5% with a credit score above 760 and could be as high as 20% with a low credit score.
Below are average returns for investing in stocks and bonds. If saving at a lending institution with a CD or savings account the rate of return may be less than 1%.
|Arithmetic Average||S&P 500||3-month T.Bill||10-year T. Bond|
Historical Returns to Investing.