Compound interest

Pat494

Legendary member
14,193 1,468
A simple question for maths geeks
I hope to make 2% a week on my wedge but usually average about 1 %.
If I start with say £100 then 1% is £1 and 2% is £2 right.
But what could I expect to profit over 1 year at 1 or 2 % with compound interest ?
 

MasterOfCoin

Well-known member
270 94
Oh yes, yes, yes.

Good link there, @tomorton :)

Compound Interest is Nature's secret doomsday weapon.

[ It is also completely and totally incomprehensible to politicians, bureaucrats and all policy makers, which bodes ill for the future of humanity ]

But for those willing to grasp it's power, it's a route to prosperity :)


For any still reading who may struggle with complex multiplication -

A 'magic' number to keep in mind is ~7%.

At this abracadabra rate, you basically double your initial start amount every tenth time it's applied.

So £1,000= at 7% APR becomes £2,000 after 10 years, £4,000 after 20 and so on...


Why doomsday? well, if you started with a grain of sand and doubled it according to this rate per minute, then...

You get 2 grains @ 10 minutes, 4 grains at 20 mins, 8 grains after 30 etc...

which is easy enough to do for the first hour or two

However, you will not have time to get bored of the task, as long before the day is out, you will run out of sand -

There is not enough sand in the entire Sahara to complete a single day of this, more pointedly, there isn't enough sand on the planet to do this. Heck, you could use all the sand on Mars too, and still not have anywhere near enough, lol.

Compound Interest is Lethal.

If you don't believe, just try it.

(or ask anyone with a runaway credit card debt)

;)
 

postman

Legendary member
22,551 2,509
A simple question for maths geeks
I hope to make 2% a week on my wedge but usually average about 1 %.
If I start with say £100 then 1% is £1 and 2% is £2 right.
But what could I expect to profit over 1 year at 1 or 2 % with compound interest ?
Previous posters have hinted at the power of compound interest, but I dont think they have done it justice. It has been attributed to Albert Einstein the quote "Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn't … pays it!"(although he has been attributed many saying that were not his).

Whilst the one year figures are correct compound interest is like fine wine or a good single malt and the awesome beauty of it can only be appreciated with a little more maturity, lets say the term of a mortgage ...

Start with £100

Gaining 1% interest per weekGaining 2% interest per week
1 year £167.77£280.23
2 years £281.46£784.18
3 years £472.21£2,195.97
4 years £792.22£6,149.44
5 years £1,329.10£17,220.46
6 years £2,229.81£48,222.93
7 years £3,740.93£135,040.03
8 years £6,276.12£378,156.40
9 years £10,529.38£1,058,962.02
10 years £17,665.03£2,965,441.19
11 years £29,636.42£8,304,208.56
12 years £49,720.70£23,254,509.28
13 years £83,415.87£65,120,257.78
14 years £139,945.88£182,358,093.31
15 years £234,785.65£510,662,508.54
20 years £3,120,532.67£637,082,695,047.13
25 years £41,474,954.42 £15,143,396,390,153.00


Now all you need is a way of making between 1% and 2 % profit consistently. ;)
 
  • Like
Reactions: Pat494 and tomorton

0007

Senior member
2,356 644
7 years £3,740.93£135,040.03
8 years £6,276.12£378,156.40
9 years £10,529.38£1,058,962.02
10 years £17,665.03£2,965,441.19

11 years £29,636.42£8,304,208.56
12 years £49,720.70£23,254,509.28
13 years £83,415.87£65,120,257.78

14 years £139,945.88£182,358,093.31
15 years £234,785.65£510,662,508.54
20 years £3,120,532.67£637,082,695,047.13
25 years £41,474,954.42 £15,143,396,390,153.00


Now all you need is a way of making between 1% and 2 % profit consistently. ;)
And the balls to keep it all in play all of the time. (Look mum - see my drawdown!)
 
AdBlock Detected

We get it, advertisements are annoying!

But it's thanks to our sponsors that access to Trade2Win remains free for all. By viewing our ads you help us pay our bills, so please support the site and disable your AdBlocker.

I've Disabled AdBlock