Which compound interest method acrues the most money & is better for the long-run??
Simple
Monthly
Quarterly
Semi-Annually
Annually
Simple
Monthly
Quarterly
Semi-Annually
Annually
Compound Interest Question
- Thread starter Sah S!NCere
- Start date
MONTHLY...
the higher the Compounding periods (12 in this case), the more interest will be charged or earned, depending on which side of the fence you are.
Now I may be able to give you more info, but you'll need to give a bit more details,for example... Is it fixed or variable??
Keep in mind that there are other factors that can weight in .
neo
the higher the Compounding periods (12 in this case), the more interest will be charged or earned, depending on which side of the fence you are.
Now I may be able to give you more info, but you'll need to give a bit more details,for example... Is it fixed or variable??
Keep in mind that there are other factors that can weight in .
neo
Sah S!NCere said:
For simple interest calculations, TIME is always in years (so 6 months = 0.5 yeras, 3 months = 0.25 years).
The formula is: Principal (P) x Time (T) x Rate (R) / 100
Where:
- 'P' is the 'principal', the amount borrowed or initial investment.
- 'R' is the 'rate' percent of interest per year.
- 'T' is the number of years that you will be paying back the loan or cashing out.
Or use this calculator: http://www.webmath.com/simpinterest.html
Sah S!NCere said:
Simple and compound are totally different. Simple does the interest calculations 1 time. Compound does it repeatedly over a period of time. Simple interest is bad if you want to make the money from the interest. If you borowing then its good. For instance if they charge you 10% Simple interest. If it takes you 30 years to pay it back that's it there is no more interest. With compound you get killed the longer you take.
Monthly will give you the most interest. Daily is even better.
This depends on the time period, the interest rate, and the principal. For instance $1000 @ 1% and 2 years is the same whether it be compounded daily, monthly, semi-annually or yearly.
In general though:
The shorter pay period you will have the interest making interest quicker than a longer period.
For instance if we take $100 with a APR of 20% compounding monthly then you will get
$100 * 20%/12 = $100 * 0.20/12 = $20/12 = $1.67
This $1.67 will start earning interest next month. Where as if its a longer time period then you will have to wait longer for that the first interest payment to start earning interest too money
http://bankrate.com/brm/calc/cdc/CertDeposit.asp
Here is the calculator for you to play with
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neo_cacos said:
alright here's the example
right now i have a savings account over 4% interest rate where the interest is paid every month.
i wanted to know is better to keep that accound w/ monthly interest OR go to another account w/ interest paid every day.
i haven't set a time limit for the accound it's more of amount thing (tryin save to get a townhouse/cash cow investment)
Sah S!NCere said:
Wow.. a savings account wiht 4% that's actually very good. I can barealy get 3 % here (in CAnada). Anyways , I have never heard of a savings acount that DEPOSIT interests daily. ? Normally, financial institusions calculate the ineterest on a daily basis, the end result is usually DEPOSITED (posted) in the account on a monthly basis.
But here's the deal, you need to find the true interest rate. The standard is to normally quote the nominal rate, from that you can find out what is the real rate. Whenever you're speaking with finance person, they will ALWAYS GIVE YOU THE NOMINAL RATE. HOW MUCH THE OTHER BANK IS OFFERING YOU???
The other question you should also ask is 'how is it calculated'/compounded'?
4% compounded monthly = 1+4%/12 Exp. 12 - 1 = 4.07%
4% compounded dayly = 1+4%/365 Exp. 365 - 1 = 4.08%
As you can see, there isn't much of a difference in terms of returns. HOwever, if they will deposit the cash in your account faster, it's better.
WATCH OUT FOR THE FEES!
BY THE WAY, CONGRATS ON THE HOUSE. I'M ACTUALLY TRYING TO DO THE SAME THING.
neo
neo_cacos said:
i see there is no real difference. thanks for leading me to the light.
my bank accounts
-----------------
1. one w/ 4.5% interest (had it for 2 years)
2. other w/ 5% interest (just opened it 2 months ago)
BTW i dont have a house... im looking for the a good investment property(s) so i can have some positive cash flow for the future.
where u at in canada?
Sah S!NCere said:
Yep...I'm in hockey country.
Actually, I was thinking about getting a 2 or 3 family house. The principle is quite simple.
- Live in one the unit.
- Lease the other units
- Move out after a while (use the equity to finance new and bigger house)...and put up all the units for rent.
It's very encouraging to see brothers trying to build wealth. Keep it up.
neo
same thing i was thinkin after i was put up on game
great minds think alike
great minds think alike
Fellas... That is one great way to play this game. Get in four units or less and the loan is just like a SFH, not commercial loan! Two, three or four units will not cost that much more than you average single family home.neo_cacos said:
In L. A., I can get a SFH for 400K to 600K. Unless I rent that home out, the mortgage is all on me. However, if I take that same the same funds and get a triplex for 500K to 700K and rent all three or two of the units, I now have someone else paying my mortgage. By renting the other two units, depending where this triplex is located in this Country, the two rents should cover you mortgage.
This is the game I’m in Dawg and it is very alive and working very well!
Stay up fellas!
“ LICK “
As stated earlier, daily is better than monthly. The more often, the better.
There are several banks out there online and FDIC insured that compound interest daily and at a rate of 5% or better. Here's a link courtesy of bankrate.com. Pick one to your hearts delight.
http://bankrate.com/brm/rate/mmmf_h...=chksav&market=416&product=33&state=US&sort=3
grandyielddirect.com and emigrantdirect are two to just name a couple
There are several banks out there online and FDIC insured that compound interest daily and at a rate of 5% or better. Here's a link courtesy of bankrate.com. Pick one to your hearts delight.
http://bankrate.com/brm/rate/mmmf_h...=chksav&market=416&product=33&state=US&sort=3
grandyielddirect.com and emigrantdirect are two to just name a couple
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