Compound interest means that after each interest period, the interest generated will be added to the principal to calculate the interest of the next period. In this way, in each interest-bearing period, the interest of the previous interest-bearing period will become the interest-bearing principal, that is, interest will accrue at interest, which is also commonly known as "rolling interest". _
Compound interest is the sum of principal and interest,
Compound interest means that after each interest period, the interest generated will be added to the principal to calculate the interest of the next period. To put it bluntly, in addition to using the principal to earn interest, accumulated interest can also be used to earn interest.
The great difference between simple interest and compound interest:
1 yuan 5% simple interest 500 years =26 yuan.
1 yuan 5% compound interest for 500 years = 96000000.
"Monthly interest compound interest" is an example:
With the same base100000, the monthly compound interest income after 30 years is 385000, which is more than the annual compound interest income of 3740001.100000.
(1) Assuming the annual interest rate is 4.5%, after 30 years of annual compound interest calculation,
100000 ( 1+4.5%) 30 = 374000.
(2) The annual interest rate is 4.5% (monthly simple interest is 0.375%), and the monthly compound interest is calculated after 360 months (the calculation method of universal account).
100000 ( 1+0.375%) 360 = 385000.
In short, compound interest always binds the principal and interest together as the basic value of the next interest calculation. The more times, the higher the real interest rate, and the higher the annual compound interest, the better.
Monthly compound interest:
The company publishes the accumulated interest rate (annualized interest rate) on the external website every month. The amount in the gold account bears interest at this rate. When the new accumulated interest is announced again next month, all the money in the account will be accumulated at the new interest rate.
Calculation method of compound interest:
The calculation of compound interest is to calculate the principal and the generated interest together, which is profitable.
The characteristic of compound interest calculation is that the sum of the principal and interest at the end of the previous period is taken as the principal of the next period, and the principal amount of each period is different when calculating. The formula for calculating compound interest is:
The present value of compound interest refers to the principal that must be invested now in order to reach a certain amount of funds in the future under the condition of calculating compound interest. The so-called compound interest, also called rolling interest in Galilee, refers to the method of making a new round of investment with interest after a deposit or investment is rewarded.
The final value of compound interest refers to the sum of the principal plus interest, after receiving the interest within the agreed period, and then calculating the interest and rolling it to the agreed period. Simply put, it is to deposit a at the beginning, take I as the interest rate, and deposit the sum of principal and interest after n periods. Formula: f = a * (1+I) n.
For example, if the principal is 50,000 yuan, the interest rate or investment return rate is 3%, and the investment period is 30 years, the interest income obtained after 30 years will be calculated according to the compound interest formula, and the sum of principal and interest (final value) will be 50,000× (65,438+0+3%) 30.
Because the inflation rate and interest rate are closely related, just like the two sides of a coin, the formula for calculating the final compound interest value can also be used to calculate the actual value of a specific fund in different years. Just change the interest rate in the formula into the inflation rate.
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For example, to raise a pension of 3 million yuan after 30 years, assuming the average annual rate of return is 3%, then the principal that must be invested now is 3000000/( 1+3%) 30.