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Compound interest calculator- Can't find one that works! Any ideas?

2 replies

gaussgirl · 23/01/2009 13:52

Trying to work out whether when we sell our house (abroad, not in the nasty GB market thank god!) whether the interest on the money will pay our UK rent? It will dictate how long we fanny around before buying here.

I need to be able to put in 'x' sum
To be able to select 'Interest calculated daily'
And input 'Interest rate'

I can then extract our rent from the end of the month total, then calculate the next month from that starting point.

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MNHQ

Tech · 23/01/2009 19:09

You might find it's a little lower - around 1046 - but you're close. If the quoted annual (APY) figure is 4.75%, normally the compounding is already taken into account.

Presuming they credit interest monthly (this is common, even if it's calculated daily,) the monthly interest rate would be about 0.3875% so you'd get $1046 a month on a $270,000 deposit. Over a year you'd actually receive 4.65% (ish) of your deposit if you are taking out the interest each month (interest on reinvested interest is what takes the APY up to 4.75% - in your case there won't be any as you want to spend the income.)

You might need to bear in mind that the income will be treated as taxable as income as well.

Biggest worry if I were you would be currency swings. When I moved to Amercia last year, $1000 bought $2000. Now it buys about $1300. If you are living on a dollar income but with costs in sterling, any future recovery in the value of sterling could leave you much poorer than you expected....

MNHQ

Tech · 23/01/2009 19:11

I meant £1000 bought $2000 of course.... doh.

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