![]() ![]() For your convenience, this calculator lets you choose which rate you would like to use. Therefore, it removes one of the main drawbacks of the nominal interest rate. The power of APY is the fact that it incorporates the effect of compounding. When you look around different offers, however, you most probably see APY (Annual Percentage Yield), which is another type of rate often quoted for savings accounts. It refers to the nominal interest rate, also known as simple interest (or the headline or quoted interest rate). Interest rate is one of the most important factors when you are about to choose a saving account. To learn more about how the present and future values are related in an investment, you may like to check out the IRR calculator or the time value of money calculator. In financial terms, they are the present value and the future value, which are linked together by the time value of money, which is one of the most fundamental concepts in finance. The opening balance is the amount that you have when you open your account, and the final balance is the amount that you would like to reach. ![]() Besides, to be able to apply this calculator properly, and to understand the equations that govern it, it is essential to get familiar with these specifications: Of course, if you feel more confident and fancy high risk, high reward scenarios, you may instead choose to invest your money in a stock or bond market.īefore you decide to open a savings account, you need to know how different factors affect your balance. For example, many countries, including the U.S.A, implemented deposit insurance to protect bank depositors, in full or in part, from losses caused by the bank's failure to pay its debts when due. The other benefit of keeping your money in a bank account is safety: your money is less exposed to market fluctuations than other investments, and is also secured by regulations. In other words, the more you restrict your ability to use your money, the more interest you accumulate on your account. The longer the term, the higher the interest rate offered by the bank.Ī deposit account that allows for the withdrawal of funds without penalty, but requires a higher minimum balance to earn interest.Īs you probably noticed, the degree of accessibility of your money and the interest rate offered are linked in the opposite manner (inversely proportional). The deposited money is fixed in the account for a specific time, and the bank imposes a penalty for premature withdrawals. Time deposit or certificate of deposit (CD).You receive interest, but the bank limits the usage the funds to ATM withdrawal only. Usually, there is no or minimal interest paid on this kind of account. This type of account is the most liquid one, as you can access your money any time through multiple channels (i.e., debit card, withdrawal, writing a cheque). To understand this, let's go through the most common types of bank account, which are the following: One of the drawbacks, however, is how accessible specific bank accounts make your money. In this way, your money are not only secured against possible thievery (and mice) but also protected against inflation. A prominent reason for relying on such financial transactions is the fact that an interest rate is applied on your balance, which is usually higher than the inflation rate. Even if you want to put cash aside, there are multiple reasons to instead deposit it in a bank, or other financial institution, in the form of a bank account. If you are looking for a rather basic tool, check our simple savings calculator.Īs you probably already know, it is generally not a good idea to save money by putting it all under your mattress. The Final Balance Breakdown and the chart of your Annual Balances provides you with the detailed balances, allowing you to follow the progress of your saving account easily over time. There is also a dynamic graph where you can study your results visually. For example, in the advanced mode you can add the average inflation rate, which allows you to learn the purchasing power of your savings. ![]() The real strength of this tool is that you can accurately model any situation. You can also estimate how much time does it take to save a desired amount and what interest rate you need to arrive at a given balance. It works in various ways: you can either find out how much you'll save, how much your initial saving should be, or how much you need to deposit over a chosen period if you want to reach your saving goal. This savings calculator, also known as a savings account calculator, is a multifunctional tool that helps you to create a precise savings plan, so that you can save up enough money to buy your dream car or holiday.
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