effect is like side effects or sound effects and affect means your actions could affect someone or something, affection.
There is a difference. It is best to learn this, I think, through reading. I could ask you, "How does what I've just said to you affect you?" This would be a correct usage. However, whatever I've said here would have had some effect on you - notice the difference?
The English language is filled with all sorts of anomalies. For example, there is such a thing as 'personal effects.' You might be habitually carry a bag, or an umbrella. These would be regarded as your 'personal effects.' You're about to be transfered oversea. You're told you can take some of your personal effects with you.
On the other hand, the word 'affect' is equally obtuse at times. He was affected by this, is correct. But what about the word 'Affection?' It has an entirely different meaning.
Confused? A lot of people are. My only suggestion: read, read, and read some more of writings by people who know how to compose English composition.
Both words can be nouns (naming objects, actions, states of being, etc.) and verbs (describing the action) - just as the word "love" can be both a noun and a verb.
But the interesting thing about "affect" and "effect" is that their meanings as nouns and verbs seem to sort of reverse themselves.
As a verb, "effect" means the same thing as "bring about," "produce" or "accomplish." A certain law might be designed to effect greater fairness for everyone. As a verb, "affect" means to "have an influence on" something. So, that same law should affect the way people live, work, speak, play, eat, and think, in order to effect the change it is designed to produce. (Having fun yet?)
As a noun standing alone, "effect" is essentially synonymous with "result" or "consequence." [Did that law have the effect you wanted it to have?] But "effect" is also used in compound expressions, as Sky321 mentions, and as a plural ("effects") it refers to personal belongings, as Tusitala Tom mentions.
As a noun, "affect" has a very specific and limited meaning that is used in psychology: mood or feeling. A person who does not express feelings is said to have a "flat affect."
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