This is a good question. It is fortunate that it demonstrates the reason why young people are scammed by loans step by step. Many people have no idea about the compound interest of exponential growth, thinking that the daily interest rate of 1.01 is a small number, but it is not. 1.01 per day is a terrifying number. 1.0001 per day is a relatively normal and reasonable value. The annual interest rate of 20% is called usury. For users who are trapped in usury, we have memorized an ancient article: borrow one year, pay it back in ten years, and pay it in a few lifetimes. Note that this article does not use exaggerated rhetoric. Because the interest rate of 20% is really not repayable for ten years, and the principal must be repaid more than six times in ten years. This is an extremely terrifying interest rate. And this extremely terrifying interest rate is only equivalent to a daily increase? 1.0005. In other words, a daily increase of 1.0005 = 5/10ths of a daily interest rate, which is extremely terrifying, a high interest rate at the usury level. Let’s look at the 10% annual interest rate, which is called stable profiteering. In other words, if your investment includes all profits and losses sideways, and the long-term average return can stably reach 10% per year, then it is a huge profit, and you are a Warren Buffett-level investor. Don’t be fooled by your temporary 40%, 100% income. This kind of income is often unsustainable. If you continue to trade stocks for five years or ten years, a certain high income will always be flattened by the subsequent sideways. In the long run, your The average return is still difficult to reach 10%. It is generally believed that you do not lose money in stocks, and you have already exceeded 90% of the stockholders. If you can achieve an average annual income of 10% in a long-term stability, then you are a stock god. But what is the daily income of the stock god level? It is 1.00026. In other words, a daily increase of 1.00026 = 2.6 ten-thousandths of a daily dividend, which is a high return at the stock god level. –So, how much daily interest is equivalent to a 5% annual income for a regular financial management level? Equivalent to 1.3 ten-thousandths of a daily interest rate. –Key point: The daily interest rate is 1.3 per ten thousandth, which is the normal financial management income, the daily interest rate is 2.6 ten thousandth, which is the stock god-level income, and the daily interest rate is 5 ten-thousandths, which is the usury-level interest rate. The subject teacher used: 1.01 = daily interest rate of 100%, which is 20 times higher than usury. This kind of terrifying growth is simply not something humans can do. Conclusion: There is nothing wrong with using index calculations. The problem is that the daily increase of 100% is really terrible. An increase of one in ten thousand is more realistic. In other words. In this formula, 1.01 is replaced with 1.0001, and 1.02 is replaced with 1.0002, which is a more reasonable value.