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.

Filter by
Sorted by
Tagged with
0
votes
0answers
16 views

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 ...
1
vote
2answers
87 views

Buy and hold to mitigate taxation

Today I came up with a reason why selling stocks too early might be a bad idea: Imagine that we invest $100 in stocks. If we assume a constant annual growth of 10% the after say 50 years, we would ...
0
votes
2answers
61 views

Calculate hypothetical stock value in n years at todays' dollars? [closed]

I'm new to investing. If I buy hypothetical stock that meets this criterion: 100 shares at $100 per share Shares increase in value by 10% per year Inflation is 2% per year In today's dollars, what ...
1
vote
2answers
99 views

How has the modern era of low dividend paying index affect the principles of compound interest?

From my understanding: *To keep it simple, we will keep the asset as index S&P500, not including asset allocation. Compound interest (or compounding interest) is interest calculated on the ...
7
votes
3answers
908 views

How to calculate savings account interest if you deposit and withdraw irregularly?

It's easy to calculate interest on a fixed principal. If you have for example $1000 deposit on your savings account and the rate is 0.25% compounded every whatsoever and you want to know how much is ...
0
votes
1answer
87 views

Are Offset Accounts OR Paying of Mortage Going to Give Me a Better ROI

I've been looking into my finances lately (I am an armchair finance person). And it looks to me, that my return on investment isn't going to be the same, if for example, I put $12000 in an offset ...
1
vote
1answer
119 views

How do compound interest calculations interact with penny round-off?

[As I have very little experience on money.SE, I welcome feedback about the following question, in addition to any answers of course.] The balance on a loan or deposit is always reported as an ...
3
votes
4answers
113 views

What formula can I use to calculate compounding interest with recurring investments?

Assume I am saving X dollars per year every year, and every year I earn 10 percent on what I saved the previous year. e.g. if I am saving 100 dollars every year I would see the trend: 100, 210, 331, ...
1
vote
0answers
68 views

Interest rate quoting conventions in financial markets

I'm aware that there exist different day count conventions for rates depending on the market but I'm still confused when it comes to the way interest rates are quoted on the market. Example if LIBOR ...
3
votes
1answer
87 views

How is interest calculated on a UK type 1 student loan?

On my student loan annual statement it says The Student Loan Company applied interest to my balance every month but only received one lump sum payment at the end of the year from HMRC, even though ...
2
votes
2answers
85 views

Calculating Annuities With Different Compounding period and Interest Period

Can anyone Help me solve this? In July 2010, Mike deposits $100 semiannually into an account compounding quarterly at 7% nominal annual interest for three years. In July 2013, he increases the ...
0
votes
1answer
67 views

Is there a general term for the increased impact of annual management fees, on investments with a positive return?

In conversations with friends, they are often very surprised at the net difference between the total of two investments with identical positive returns, which can be attributed to different annual ...
0
votes
1answer
56 views

How do I calculate an average monthly income, with accurate yields, from dividend stocks paid quarterly and monthly?

I have a column that has evolved over months and I have another spreadsheet with my positions (my stocks, # of stocks, dividends payout and dividend yield). Those won't move. However, some of my ...
2
votes
2answers
176 views

What compounding frequency should I choose for this retirement calculator if I invest not in bonds, but in S&P500

I am trying to use a retirement savings/investment calculator using this: https://www.getsmarteraboutmoney.ca/calculators/compound-interest-calculator/ I chose initial investment of $1500, monthly ...
0
votes
1answer
42 views

How to calculate equivalent interest rate of gains with monthly contributions?

I started the year with a known amount of funds in my account and I make regular (assume equal) monthly payments into the account. I know how much my gain/interest for the year is. I believe the ...
1
vote
1answer
39 views

Chart showing returns by asset class vs CAGR [closed]

I know of charts that show yearly returns by asset class. Are there charts that show 10 year CAGR by asset class?
0
votes
2answers
428 views

Help with a homework question calculating interest

Question : Imagine that you deposit $6,000 a year, starting one year from today, for four years into a savings account paying 6% per annum. (That is one deposit of $6,000 per year.) How much money ...
2
votes
5answers
188 views

Definition of compound interest

The textbook by John Hull (9/e) describes "quarterly compounding" on page 80: If the interest rate is measured with annual compounding, the bank’s statement that the interest rate is 10% means ...
-1
votes
1answer
87 views

Compound interest, no dividends, no share price change

I've read about compounding and understand dividend reinvestment, but still not sure about compounding on stocks with no dividends. Is this scenario correct? Share purchase price = $ 10.00 $ 0 ...
7
votes
6answers
3k views

Does the growth of home value benefit from compound interest?

I read Investopia's definition and my take away is that compound interest applies to an investment that yields some return on a regular basis and that yield is reinvested in that instrument. If I have ...
2
votes
4answers
147 views

What is an appropriate metric measure average annualized rate of return for an average investor?

Let us say an investor invests $X per year for N years. Let us say the final portfolio value is $Y. In this scenario, how should I measure a metric that quantifies "average annualized return"? I ...
0
votes
1answer
24 views

Can I report all my taxable interest in Schedule CA NR Column E even if I wasn't a resident for the entire year?

Filing 2016 taxes. The place I having a savings account in reported $12 in 1099-INT. I started living in California at the end of January. Will my taxes get rejected if I report all $12 in column E ...
2
votes
2answers
277 views

How much do I need to save per month in an interest-bearing account to reach a certain account balance in a certain number of years?

How do I calculate what my monthly contribution should be to an interest bearing account, knowing how much I'll need to have in the account in a given number of years? For Example, I need $8,203.03 ...
1
vote
1answer
107 views

What kind of interest rate is used on treasury bills?

Let me use an example. If we say the yield to maturity of 1 month treasury bill is 2.414% now, what exactly does it mean? In actuarial notations, this number can mean effective interest rate (APY), ...
0
votes
1answer
39 views

Finding the price of an item years earlier from compound interest, simple interest, or APY

Is there a way to use the compound interest formula, simple interest, or APY to find the price of something years earlier if the price of it was increasing by a certain percentage annually?
1
vote
1answer
156 views

When to make Credit Card payments on large balance with interest

Consider the following scenario: A credit card has a balance of $5000 that cannot be paid off at this time. Every week I earn $500 that is deposited to my bank. My monthly minimum payment is $200. ...
1
vote
3answers
551 views

Does compounding frequency have any bearing on the return on investment?

If I take 100 dollars and put it into a savings account that pays me 5% annual interest which compounds monthly. At the end of the year I will have $105.12 If I take the same 100 dollars and invest ...
1
vote
2answers
148 views

effective rate loan installment

Why is it that the effective rate is based on compounding and it is also paid only on the remaining loan balance in compounding interest we pay interest on interest? Can someone explain in to me? what ...
0
votes
2answers
202 views

How to calculate the payback period when income is reinvested? [closed]

Could someone please show me how to calculate the payback period with compounded interest? So if I had a initial investment of $100, paying 1.5% interest annually that is reinvested, how do I ...
3
votes
2answers
865 views

interest compounded daily vs monthly

I want to compare two saving accounts with same APY, but one has interest "compounded daily and credited monthly" and the other has interest "compounded monthly and credited monthly". Which will yield ...
2
votes
3answers
349 views

How to calculate the return from a mutual fund?

How do I calculate the return from a mutual fund invested as a monthly SIP of Rs. 5000 over a period of 3 years at a return rate of 20.4% per annum? The projected amount for the same is calculated by ...
2
votes
4answers
251 views

Time value of money confusion [duplicate]

I am new to the stock market and currently trying to just get a basic understanding of the stock markets using online sources (investopedia). I came across this sentence when I was reading on a ...
2
votes
1answer
330 views

Building Marcus Savings Calculator in Excel

I'm trying to do some analysis in Google Sheets which involves putting money in Marcus' High Yield savings account. For some reason, I can't seem to get my numbers to match the values from their ...
1
vote
3answers
335 views

Long Term Stock Investment and Compounding

I have a query that's been bugging me. I have been investing in the UK stock market + funds for around a year now. Current Investments - Retirement Fund - FTSE index Fund - Managed Accumulation ...
2
votes
1answer
86 views

Understanding effective interest rate and compounding period

An article I'm reading says "An effective monthly rate [on a loan] is quoted over a one-month period. Since it is effective, it is compounded once per month." Is that still true if there's no ...
5
votes
4answers
2k views

Do pension pots get interest? [closed]

Pension pot is the money, the employee and sometimes the employer and the government pay that gets accumulated into pension fund. But my question is, that this pension fund is basically a bank ...
0
votes
1answer
80 views

How to compare the APRs of different currencies?

I want to take a loan and I have two options: Euros APR: 7.2% terms: 10 years Yuan APR: 9.2% terms: 5 years I have taken some financial classes so I have a vague idea about it. I know there is an ...
3
votes
3answers
512 views

How to know how much money was paid, and how much was spent paying off interest

I would like to buy a car, and found out about the 20/4/10 rule today. I definitely have more than 20% downpayment saved up, due to that I am not concerned with the 20 part. I am more concerned about ...
2
votes
2answers
155 views

How to calculate how long my money would last

I want to calculate how much money I'll need in retirement. For that I want to calculate how long my money will last. I'm not sure if there is a formula for that. Lets say we have this simple ...
1
vote
2answers
117 views

Comparing Real Estate returns to Mutual Fund returns

I was recently looking at a syndicated Real Estate investment that did some math to show what future returns might look like. The bottom line was that a $1,000 would turn into $2,360 after 10 years. ...
1
vote
2answers
120 views

Future value vs total amortized cost of a loan

My goal is to determine the total cost of a mortgage loan (principle + interest for 30 years) I assumed that the future value(FV) of a loan is the total amortized cost of the loan. Is that assumption ...
7
votes
4answers
35k views

How does compound interest work with stocks? [duplicate]

I just learned about compound interest, and I want to know if I understood it right: You buy a stock, and then you just keep it. And over time, you will just earn interest on your interest. Is that ...
153
votes
24answers
55k views

Why do people save so much?

When I am old and retired (70 years +), I don't plan to spend a lot of money. I'll be living in my own house that is already paid off at that point, so no rent or mortgage payments. Since I don't need ...
1
vote
1answer
93 views

Loan with floating interest [closed]

I have taken a 7 years loan of 450 000 for a car in January 2017 with monthly payment of 7077. The interest rate was 8.25% which means that the total repayment is 593878 after 7 years. As from ...
1
vote
1answer
74 views

Calculating Amortization Payment Amount when first payment is early

How can I determine a fixed payment amount for a loan that has an early first payment? Example: Loan Amount: $100 Interest: 10% Loan Date: January 1st, 2018 First Payment Date: January 15th, ...
1
vote
1answer
139 views

What is the formula for loan payoff with daily compounded interest and annual payment?

I am trying to get the loan repayment amount for below data : Loan Amount: $20,412.65 Payments (#): 10 Annual Interest Rate: 2.5% Loan Date: 07/02/2018 First Payment Due: 09/02/2018 (next payment ...
34
votes
3answers
13k views

Would compound interest work better if all my accounts were combined into one?

My wife and I currently have three retirement accounts from different jobs. The only one currently getting paid into is my TSP account. Would we realize better gains if we combined the other two ...
3
votes
1answer
608 views

Which compound interest formula can I use to find the final balance with monthly contributions that increase yearly?

I apologise in advance if this has been asked already - I can't seem to find a similar question. I am looking for a formula to find the final balance when provided the following variables: Initial ...
1
vote
1answer
289 views

How are CAGR and compounding frequency related?

I am newbie, so forgive me if my question seems trivial. I have a numerical where a bank scheme triples a person's investment in 5 years but it doesn't talk about the compounding frequency. Assuming ...
1
vote
2answers
416 views

Compound Interest & Mortgages

Mortgages are compounded 2 times a year in Canada and 12 times a year in the USA. However, I read that mortgages are simple interest and not compound interest because you pay the interest for each ...