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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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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 ...
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1answer
78 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 ...
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4answers
223 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 ...
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1answer
100 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 ...
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3answers
183 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
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1answer
68 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 ...
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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 ...
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1answer
41 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 ...
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3answers
183 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 ...
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2answers
142 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 ...
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2answers
107 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. ...
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2answers
85 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 ...
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4answers
6k 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 ...
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24answers
51k 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 ...
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1answer
91 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 ...
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1answer
53 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, ...
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1answer
122 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 ...
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3answers
8k 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
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1answer
347 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 ...
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1answer
234 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 ...
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3answers
2k views

Is there any way to achieve compound interest daily? [closed]

Is there any way to achieve compound interest daily, reinvesting every 24 hours (or less)?
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2answers
305 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 ...
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2answers
146 views

What would be my total saving with an increasing and regular yearly deposit after 30 years?

Let's say I deposit $50,000 into the bank and in the first year I put in an installment of 5,000 and the interest is calculated monthly at 7%. In the second year, all is the same except for my yearly ...
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2answers
143 views

How to compare loans of same principal, same interest but with different tenors

I have a scenario where there are 2 loans that can be provided (assuming I am providing the loan). The principal amount is the same, 30,000 in case of both the loans. The interest is also same at 17%. ...
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2answers
3k views

Compound daily interest with monthly deposits over x amount of years in excel

This is compound interest calculated daily and topped up with deposits every month e.g Begin with $100, earn 2% interest earned daily even on weekends, and then come month end invest another $100 on ...
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3answers
92 views

How rate of interest affects inflation rate [duplicate]

Suppose i invest 100000 today.and suppose rate of interest is 12% and inflation rate is 6% . so what amount i will get after 2 year at the rate of 12% and inflation of 6%. In other word you can say,...
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1answer
99 views

How to calculate the future expenditure of education :

Suppose the following: if a child's age is 2 years today and he/she will go to college at the age of 15 years for 2 years(duration of education) and for which Cost incurred P.A. as on today (Rs.) ...
2
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1answer
165 views

Investing and compound interest? [duplicate]

I see lot of information about the power of compound interest and how it can help money grow. I understand the mathematics of compound interest but I have no idea how to take some money and make it ...
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2answers
1k views

How to profit from compound interest when investing in single stocks? [duplicate]

I started investing in the stock market last year. I've read tons of information and tried different products. My knowledge about compound interest is, when you invest in one stock, get 5% return, ...
2
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2answers
1k views

Calculating interest on a daily base, compounded monthly [closed]

I am a programmer knowing next to nothing to interest calculation and I have to determine a formula to calculate interest on a daily basis compounded monthly. The main problem here is that the ...
3
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1answer
1k views

Compound Interest Formula With Monthly Investment Increase

I'm looking to solve this problem: If I were to start investing now, With a 4% annual return compounded monthly what is the function for my return if my monthly input is initially $2000 then for ...
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1answer
154 views

How do I know if my mutual fund is compounded?

I have money in a S&P Index Fund (VFIAX specifically). How do I know if my index fund is compounded? Furthermore, at what intervals is it compounded? And more importantly, should it be compounded?...
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2answers
1k views

Calculating Compounded Salary Increase Percentage with Multiple Years and Durations

I am trying to calculate the cumulative salary increase across 10 years. The issue is that some union members received raises multiple times a year, and other years they received no raises. I am ...
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4answers
364 views

Is it possible to borrow money to accrue interest, and then use that interest to pay back the borrower + fees?

Say I want to borrow $225,000.00 to accrue interest on a 1.20% APY account. I promise the lender that I'll pay them a fixed-rate of this interest with agreement that I cannot withdraw nor touch the ...
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2answers
20k views

How do I calculate monthly compound interest in Google Sheets?

I have a financial spreadsheet with a column of all my deposits into my savings account. The leftmost column lists the dates of the deposits. Now, let's say my savings balance is $100.00 and my ...
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7answers
486 views

Why “N-year” loans (and other complications)? Why does a loan need so many parameters?

If the title sounds ridiculous, please hear me out before downvoting. Let's start simple. You have too much money on your hands and want to start a loan business. If you neither want to gain nor ...
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3answers
865 views

Looking for Excel formula to calculate the benefit of making additional payments on a loan with interest daily compounded monthly

I'm looking to make extra payments to my student loans. I currently owe $30,000 at 5.25%. I pay $250 on the 15th of every month. My loans accrue interest daily that are then compounded monthly. I want ...
2
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1answer
3k views

Monthly payment on a compounded daily car loan? [duplicate]

I just took a car loan. The amount financed is $12,865.57, the APR is 3.06%, and the length is 48 months. The finance company charges $285.47 monthly. I would like to know how they calculated such ...
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2answers
1k views

Does compounding interest on a loan matter if you pay all the interest accrued each statement?

Several answers on a question about recalculating interest when paying off a mortgage early mentioned how their examples didn't account for compound interest, which would complicate things. Is this ...
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0answers
670 views

how to deal with february in accrued interest calculation (30/360 day count convention)

How would you deal with the month of february in a daily interest calculation on a loan that compounds monthly? I would think that with 30/360 day count convention, each day in february results in ...
3
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1answer
438 views

What are the ways compounding can occur from an investment in stocks and bonds?

I've been trying to understand the multiple ways stocks and bonds compound (under the definition of compounding as generating earnings from the reinvestment of previous earnings, my understanding of ...
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4answers
3k views

Am I paying too much in mortgage interest?

Hi there all you smart people. I am looking for a hand on a mortgage I currently hold. I will give a little back story to hopefully let you see where I am coming from. I have a summer home (the only ...
5
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1answer
182 views

Future value of a compound-interest savings account when contributions are inflation linked

I've got a savings objective to achieve in 6 years and I'm trying to work out the percentage of salary I need to put towards it to achieve it. I am trying to work out how to calculate the future ...
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1answer
108 views

Computing initial required cash for retirement

I am trying to create a simple retirement calculator. My inputs are: annual income required during retirement (before inflation) inflation rate number of years of retirement yield on investment I ...
3
votes
1answer
235 views

Loan payoff benefit versus raise. Break-even point needed

I have student loans that are under a program that pays off any remaining balance after 10 years of work. I become ineligible for this benefit if I change companies. So, I need to figure out, at what ...
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2answers
426 views

Reinvest 401K Gains for Compounding Growth

I'm a bit confused about compounding growth on my 401K. Let's say I have $100 and it's up 10% in Year 1 for a total of $110. Now, should I sell this at the end of the year to lock in gains and ...
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9answers
19k views

What are the alternatives to compound interest for a Muslim?

I have read the importance of saving early and the power of compound interest many many times. However I am a Muslim and cannot participate in anything involving interest. I also learned that keeping ...
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1answer
126 views

How to calculate the compound interest for the following scenario

Mr A plans to invest 100000 every year for 15 years (he will withdraw money at the end of 15 years) and is expecting a return of about 12%. I know the FV function of excel but how to use it ?
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1answer
3k views

Annual compounding with monthly payments

I'm trying to solve the following problem using the Time Value of Money formulae on MS Excel and getting nowhere. Can someone please help me? X makes monthly payments of $3500 at the end of each ...
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1answer
276 views

Why does my interest charged (on loan) fluctuate from my own calculations?

I just want to know if I am calculating the interest correctly. Or is the interest rate is fluctuating slightly? Its not really that big of a fluctuation (we're looking at a range of 5-10 cents off). ...