42 votes
Accepted

Which mortgage should I pay off first? Same interest rate and mortgage length

You haven't accounted for what happens when the small loan is completely paid off. Seven years into the aggressive payoff schedule you need to shift all original principal and interest payment and the ...
mhoran_psprep's user avatar
11 votes

Which mortgage should I pay off first? Same interest rate and mortgage length

However, I just started thinking, and because of the nature of amortized loans, I'm obviously paying quite a lot of interest in the beginning.... This is a common point of confusion, the portion of ...
Hart CO's user avatar
  • 70.3k
5 votes

How do we trust power of compounding with mutual fund SIP

40 years is a long time, and 11.5% is a large interest rate. They combine to produce a huge return. This is easier to see if you use simpler numbers. If you start with 100, and get 10%, after 1 year ...
Kate Gregory's user avatar
4 votes

How frequently is interest compounded when estimating market returns

But when one simply wants to estimate something like a diversified 403b or 401k, should yearly, monthly, daily, or continuous compounding be used? If you are invested in individual stocks, or stock ...
mhoran_psprep's user avatar
3 votes
Accepted

Monthly Rate vs Continuously Compounded Rate

(a) 100,000 * (1+1%)^36 = 143,076.878 I am not sure if I get (a) correctly because I see that some people calculate it as 100,000 * (1+1%*36) If you are earning 1% each month on your balance, and the ...
mhoran_psprep's user avatar
2 votes
Accepted

If APY factors compounding (while APR doesn't), shouldn't APY always be higher than APR?

Why is this lower? Does the APY for amortization schedules work differently (because interest is front-loaded or whatever)? But since the loan only lasts one year, how would that even make a ...
Hart CO's user avatar
  • 70.3k
1 vote

How frequently is interest compounded when estimating market returns

You would use the same frequency you are measuring your return. If you expect to earn 3% per quarter you would use quarterly compounding. If you expect to return 12% per year you'd use annual, etc. If ...
D Stanley's user avatar
  • 133k
1 vote

Calculating CAGR for Ordinary annuity

First illustrating the method with a small example: 3 annual payments of £100 at 10% per annum. c = 100 r = 0.1 The first £100 compounds for 3 years, the second £100 for 2 years and the third for 1 ...
Chris Degnen's user avatar
  • 9,747
1 vote

How to deal with February in accrued interest calculation (30/360 day count convention)

For accrued interest "30E/360" is what the method to standardize on 30-day months is called. It is almost never used. Accrued interest/360 is used, but more common is accrued interest/365. ...
Alex Lamb's user avatar

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