Questions tagged [compound-interest]
Compound interest is the result of reinvesting interest so that interest in the next period is then earned on the principal sum plus previously accumulated interest.
199
questions
2
votes
1
answer
2k
views
Google Sheet formula for annualized returns - doubts
I'm trying to setup a calculator in google sheets where I calculate the future value of investing for example:
a principal of 10.000
into which I deposit 1.000 every month
the investment doesn't give ...
- 23
1
vote
1
answer
313
views
Understanding a UK Plan 2 Student Loan Interest Calculation
I recently requested a statement from SF England regarding my student loan outstanding debt. Once I had this I was leafing through but started to become confused about their methods of calculating ...
- 13
1
vote
2
answers
228
views
Proper way to annualize returns
Searching for "how to annualize interest rates" on Google leads to the following results:
Wikihow's How to Annualize a Percentage
Investopedia's Annualized Rate of Return
Wikihow
...
- 1,297
2
votes
1
answer
177
views
Mistake in Investopedia's article on APY?
My question is about James Chen's article on Investopedia, Annual Percentage Yield (APY), last updated on October 17, 2020.
It begins by correctly stating the formula for APY:
APY = (1 + r / n)^n - 1
...
- 1,297
0
votes
2
answers
169
views
Help Calculating Monthly Earnings with two co-existing APYs in same "Savings" Account from T-mobile Money
Background
I have a T-Mobile Money (via BankMobile, a division of Customers Bank) interest checking account.
I'm trying to track earnings per month but I'm a bit confused by their fine print and their ...
- 107
0
votes
1
answer
35
views
Compound Profit per trade vs Time on Stocks with target profit
Any good Spreadsheets or explanation that track compound profit for stocks with time considered? I am trying to journal my stock trades and set some goals. We know compound interest is powerful. I ...
- 1
0
votes
1
answer
146
views
Why articles give the stock market as an example for compound interest?
I have read a dozen or so books, including The Intelligent Investor, but I still like to read random articles about investing.
I keep finding articles like this one where they give the stock market as ...
- 665
2
votes
1
answer
101
views
Calculating monthly and annual payments with corresponding rate: different results?
Good evening everyone,
I got a small financial problem that I tried to understand and, even though I come to the right answer, I do not understand why my alternative approach does not work.
Problem: ...
- 23
2
votes
1
answer
139
views
Am I using the right method for this compound / simple interest problem with annual deposits?
I am trying to solve the following exercise:
A bank account is opened at the beginning of the year 2013 by making a one-off deposit of £1000. A further deposit of £200 is made at the beginning of each ...
- 21
0
votes
1
answer
539
views
Cannot understand the 10 year VTI growth chart on Vanguard
The image below shows the performance of Vanguard Total Stock Market ETF (NYSE Arca: VTI). I cannot understand how $10,000 becomes $34,070 after 10 years with a 10-year return of 12.80%.
Shouldn't it ...
- 233
1
vote
2
answers
622
views
EU APR calculation, solving for APR
I'm looking for some help with a finance homework. We've been given the FCA calculation for APR:
Source: https://www.handbook.fca.org.uk/publication/handbook/graphic/13449.png
We've also been given a ...
- 11
-1
votes
1
answer
66
views
Interest Rate Interpretation
If someone says that the six month interest rate is 5% quoted for an act/360 daycount with semi annual compounding, this means that the amount to pay on a loan of $1 to be repaid in a year is 1.025^2, ...
- 137
10
votes
3
answers
3k
views
When computing monthly interest, why do we divide yearly interest by 12, rather than taking the 12th-root?
I've been reading about loans and interest rates, and I've run across a mathematical sticking point. The crux is that, if my loan's outstanding balance is £100,000, I make no payments, and it has an ...
- 201
1
vote
2
answers
2k
views
Index fund question regarding Vanguard 500 Index Fund Admiral Shares - compound interest
I created an account with TDAmeritrade and started investing in VFIAX(Vanguard 500 Index Fund Admiral Shares) three years ago. At the time, I thought that I am investing in an index fund. However I ...
1
vote
4
answers
1k
views
Why do banks pay a compound interest on deposits instead of simple interest?
Why do banks pay a compound interest on deposits?
Obviously they'd be better off paying a simple interest instead, which would still be attractive to their customers.
However I figured that in such a ...
- 121