Principal
The principal is the original amount of money borrowed in a loan or the original amount invested in an investment.
When you make payments on a loan, a portion of each payment goes towards the principal and a portion goes towards the interest. Over time, as you pay down the principal, the amount of interest you pay decreases.
Similarly, when you invest money, the principal is the initial amount you invest, and any earnings or losses are added to or subtracted from the principal.
Understanding the concept of principal is important for managing your finances and tracking your investments.
Related Terms:Â Interest, Loan, Investment, Mortgage, Savings