Like the rate of interest, frequency of compounding the interest rate can influence the return you realize from your savings or investments. This recommended calculator will identify the differences in returns due to changes in the frequency of compounding. Take a look at the reports to find out the changes in annual percentage yield (APY) for a changed type of compounding method.
Amount of dollar you want to invest initially.
Rate of interest you expect to earn from the investment.This is only a prediction of future account balances. The investments you select will be a determining factor in the actual rate of return. The annual compound rate for the S&P 500 for the ten years ending on the 31st of December 2012 was an average of 7.1% and included reinvestment of dividends. The S&P 500’s average annual compound rate of return from January of 1970 to the 31st of December 2012, with reinvestment of dividends included, were roughly 10.1% (source: www.standardandpoors.com). The highest return for a 12 month period since 1970 was 61% (for the months of June 1982 through June 1983). March 2008 through March 2009 rendered the lowest return of 43%. Although bank savings accounts can pay as little as or less than 0.25%, they carry a lower risk of loss of principle balances.The scenarios above are hypothetical, as the rates of return cannot be accurately forecasted for the future. As well, investments that yield higher rates of returns are subject to having a higher risk and volatility. Over time, particularly for long-term investments, the rate of return will vary greatly. The possible loss of principle on your investments should be considered. Other fees and sales charges may be required by investment or funds companies and are not indicated in the compound rate of return mentioned above, and a direct investment in an index is not possible.
Term length for the investment.
Interest rate calculated on the investment’s interest, plus previous period’s interest. This can happen daily, monthly, quarterly, or yearly as per your terms of contract.
Annual percentage yield for yearly compounded investments.
Annual percentage yield for quarterly compounding investments.
Annual percentage yield (APY) received for monthly compounding investments.