# 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.

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### If you pay off a variable APR daily accruing credit card before the end of the month, is there interest?

Can you avoid 100% of interest on a card that accrues interest daily, by paying it off in full before the end of each billing cycle?
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### CAGR of Monthly Close Prices

In step 7 in this tableau tutorial he uses the number of periods as 12 I believe this number should change. So for instance if we started with January to March, the number of period would be 3. Then ...
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### Calculating cumulated interest of mortgage within a specific time span

I like to use google sheets because of its ease of access with just a link. I have a mortgage and I need to be able to calculate the interest within a year (but I'd like to be able to do it within any ...
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### What's the formula behind these two stock trading scenarios?

Let's say I have \$10,000 in my account. Scenario 1: If I make 10 trades in a year and each trade I position size using only 25% every time and exit the trade after a 10% gain, my account would grow by ...
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### How long will it take to pay off a Virgin Money Transfer principal balance of £ 5,816.21 at 23.29% variable interest?

I'm thick when it comes to finances. I don't understand how interest and compound interest works, so I'm seeking help. I have a Virgin Money Transfer principal balance of £ 5,816.21. Interest rate ...
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### Financial pros and cons of having a rainy day fund in a savings account versus invested?

I used to have about 4 months of expenses in a savings account as a "rainy day fund" in case of emergencies. The last year or so, though, I've switched to having a minimum of expenses (about ...
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### Calculate interest rate APR (compound and normal) on a daily basis

Let's assume there is an interest rate of 0.61%. So, the interest is 0.61% AER which is then divided by 365 and paid daily. The interest rate is for the year, not per day however interest is paid ...
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### Calculating Effective Annual Interest Rate & Annual Percentage Rate with fees (in R)

Problem How to calculate Effective Annual Interest Rate (EAR) and Annual Percentage Rate (APR) with fees (in R) ? I am interested in getting to know how much I am actually paying interest when fees ...
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### How to find CAGR from absolute return in a given duration?

What is the formula to figure out "Compound Annual Growth Rate (CAGR)" from absolute returns? Say, if 100% is the absolute return in 5 years tenure, then how would I find what is the CAGR ...
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### Calculate APY given start balance, end balance, and term

I'm having trouble figuring out the formula for calculating APY given a starting balance, ending balance, and term in length of years. What's the formula to do this?
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### Handing multiple people pooling money into a crypto that compounds

This might be an odd one, but I’m looking for some advice. I have a few people wanting to pool money together into a crypto that compounds. I’m looking for a good way to record the percentage that ...
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### Finding optimal balance between unscheduled mortgage loan replayments and financial market investments

Imagine the following situation. You have a mortgage loan, it has a quite low fixed interest but runs over a couple of decades You have positive experiences over a couple of year with the financial ...
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### Future value of an annuity with variable compounding time?

I haven't found any information on this so here goes: Is there any general formula for calculating future value of an annuity (recurring deposit) when the interval of interest compounding is variable? ...
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### Calculating APY and compounding rates of investment on Coinbase

So I have been working on determining which is better: the Coinbase apy seen in coins such as DAI (2%), and Algorand (4%) and a bank's apy, say 0.6%. I have the calculations in Matlab, but wanted to ...
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### How do I calculate Compound Interest with changing monthly contributions, quarterly contributions, and changing interest rate

John currently has \$100 in a saving account that compounds quarterly at a .25% interest rate. When the account's balance reaches \$2500 or more, the interest rate will change to .05%. I want to figure ...
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### Formula for "How long until balance 0" with compound interest and withdrawals?

I an looking for a formula which returns "n" for a given combination of Starting balance (1M) Withdrawal rate per year (80k) Expected interest (8%) I looked around but couldn't find a ...
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### Calculating daily yields with a different compounding interest

For simplicity's sake, suppose I have an investment that earns 1% daily return on average. The following day, that 1% earning is immediately rolled over into an account that earns 10% yearly ...
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### Compound Interest Problem [closed]

Vanessa decides to invest R 140,000 into an account earning 13.5% interest per year, compounded quarterly. This new account allows her to withdraw an amount of money every quarter for ten years after ...
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### How does the continuously compounded interest formula work in terms of months?

The continuously compounded interest formula is: Pe^rt Where: P = Principle e = 2.718... r = Annual interest rate t = time in years If instead of an annual interest rate, I got a monthly interest ...
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### Calculating real rate after taxation - is there a better way?

First I need a sanity check for my calculations. Say I have this scenario: Nominal Rate (per year) [r] 13% Inflation Rate (per year) [i] 5% Initial investment [x] \$ 100.00 Time (years) [t] 10 Tax ...
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### Do I make more money if I combine 2 VTI investments (me and my spouse) into one investment?

Myself and my wife own some VTI ETF. I own more and she owns less. We are planning to make some additional monthly investments into VTI. Question -- Which account should we put more VTI in, mine or ...
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### calculating stock investment return

Please help. I am stuck. I am still pretty new to investing, so please be nice and a simple explanation is much appreciated. I want to calculate the capital gains (NO DIVIDEND) annual return of a ...
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### How best to maximise the compounding effect of vanguard investing platform?

I have recently put 2K into the vanguard life strategy 100% fund, which is a pre diversified fund of funds. I also drip feed this account monthly. Now I’m putting another 2K from savings into vanguard ...
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### Is a bunch of debt now better than distributed debt in the future in terms of paying less in the long run?

This might be too theoretical but it popped into my head this concept for attending University/College. If you had the ability to choose one of the following which is best in terms of you paying ...
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### 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 ...
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### 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 ...
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### 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 ...
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### 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 ...
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### 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 ...
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### 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 ...
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### 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 ...
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### 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: ...
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### 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 ...
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### 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 ...
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### 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 ...
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### 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, ...
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### 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 ...
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### 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 ...
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### 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 ...
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### Is there a concept similar to "continuous compounding" but related to dollar cost averaging when buying (e.g.) shares or bitcoins?

I know that dollar cost averaging (DCA) is "drip feeding" a total amount to be invested over regular intervals like daily, weekly or monthly, so that each share purchase (or whatever the ...
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### Calculate term of mortgage based on monthly payment value

Using the PMT formula in Excel, I can calculate the monthly payments based on the interest on the loan (e.g.2%), the principal value of the loan (e.g. £100,000), and the term of the loan (e.g. 25 ...
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### Calculating the compounding interest formula for an overnight rate

I am VERY NEW to all this industry, so I apologize in advance if my question is too simple. I am given the formula to calculate the compounded rate, where Ri is the effective rate and k is the ...
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### Inflation and the current value of my dollar

I am trying to figure out the value of my \$100 with a hypothetical 2% constant inflation rate after 30 years. Here is the scenario: suppose I have \$100 laying under my bed and the hypothetical ...
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### Is it good to invest in mutual fund during the down time in market?

Say there is a mutual fund and its annual return in the past 3 years i.e. 2017, 2018, 2019 were -10%, +20%, and -10% respectively. A and B invest \$100 in this fund at different time points. A ...
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### Can I renegotiate desirable rates and terms on a paid-off credit card?

I would like to keep and use my business credit card, but I do not need it. I paid off around \$10k today which took my balance to zero, now that my 0% introductory rate has ended. (The card is around ...
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### How much benefit we earn with no cost emi on CC

I am thinking to take a policy on no cost emi of CC. I want to find money I saved annually by opting to no cost emi against paying all premium lumpsum at the start of the year. I want to consider ...
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### Find ending balance given return rate and amount added each year

If I have an investment that grows 10% per year, and every year I add an amount, is there a formula that can be used to find my ending balance after n years? The following demonstrates this: year 0: ...
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### Average Yearly Return: is this correct?

If an initial investment of 100'000 results in 200'000 after 10 years (including the initial investment), is it correct to say that the investment has returned on average 10% per year? I am guessing ...
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### Compound interest rate

Given annual interest rate r_ann and n compounds per year, why do we use the formula (1+r_ann/n)^tn rather than (1+r)^tn given r = (1+r_ann)^(1/n) - 1.
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### How does a break in contributions (eg. working holiday) affect superannuation over time?

I'd like to better understand how a break in superannuation contributions during a working holiday affects the long term balance. Say I'm 35 years old and accumulated \$100,000 AUD in Australian ...
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