Home Equity
Interest Rates
Credit Repair
Refinancing
Reverse Mortgage
Mortgage Advice
Debt Modification
Home Equity Loan
Bad Loans
Mortgage Products
Mortgage Applications
Mortgage calculators
Adjustable Rate Mortgages
|
Details on Compounding Savings CalculatorIf you continue with a consistent savings plan, compound interest could be a powerful force. In a layman’s understanding, it implies earning interest on the interest. This means that interest is calculated based on the principal sum in addition with any accrued interest; this is contrary to simple interest which is interest computed only on the principal amount. In the absence of concrete numbers, it is difficult to compute how much you can save. You should think of using a compounding savings calculator; it will aid you by taking compounding funds and interest rates into consideration when embarking on a planning for your savings goals. There is need for you to get your information on hand in order to use the savings calculator.
- Beginning amount: this is the beginning balance or present amount you have either saved or invested.
- Extra contributions: this is the amount you intend adding to your savings or investment every period. Annual, quarterly and monthly investment periods are available.
- Years/Duration: this is the total number of years you plan to invest or save.
- Rate of Return: this refers to the annual rate of return for the investment or savings you plan. Historically, the main stock indexes have averaged 11% to 12% annually. If your intention is to withdraw your money within 5 years; it may be better to opt for a more conservative rate of return.
- Compound Interest: This is the incidence that the interest or income on your investment is added to your account. The more frequent this happens, the earlier your accumulated interest income will produce extra interest.
Concerning stock and mutual fund investments, you should select annual. For savings account and CDs, the other options will be applicable; however, verify from your financial institution to find out the frequency of compounding interest on a given investment of yours.
|
Watch The RateWindow™ Video