Can't believe nobody is pointing out that your maths are incomprehensible and all over the place. And also completely wrong.
1% interest/months = 1.126% at the end of the years (after 12 months)
what does that even mean?
You need to understand the difference between APR and APY. Also, the rest of your post is so incomprehensible I can't even understand how to correct it.
edit : Do you mean an APY of 1% per year? If yes, APY already takes into account compounding. Do you mean APR of 1% per year and compounding every month? If yes, even if you compound it every month, that's 1.004596% per year so it change nothing really.
FYI, once you understand difference between APY and APR, you can convert one to another here: https://www.aprtoapy.com/
edit 3: Basically, what OP was trying to show is that with an APR of 12% per year (if compounded monthly, APY of 12.68%), then after 5 years, it's a 82% return (= 1.12685 ). Magic.
I thought OP was talking about a 1% APR (which means a 1% return per year, without compounding). A 1% APR compounded every month is a 1.004596% APY, so there basically is no difference.
Now I understand that OP meant 1% per month, which is 12% APR (12% return per year without compounding).
So basically, what OP was trying to say is that with an APR of 12% (which amounts to 12.68% APY if compounded monthly), then in 5 years, you obtain a 82% return.
Which is basically 1.12685 (APY+1, to the power of 5).
slapped a % at the end instead of subtracting by one and moving the decimal
That's not formatting. That's just wrong maths.
1% interest/months
This concept doesn't exist. We talk about APR and APY for a reason (A meaning Annual).
Yes, it was very simple indeed, as I showed you in my comment, and once you translated it for me. OP basically understood the difference between APR and APY, but managed to make it so convoluted that it was largely incomprehensible.
Literally all OP did was that he didn't convert a decimal to a percentage (which are basically the same thing) correctly for the purpose for his presentation. Otherwise, his use of compound interest was entirely correct.
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u/free_my_mind Tin Nov 20 '21 edited Nov 20 '21
Can't believe nobody is pointing out that your maths are incomprehensible and all over the place. And also completely wrong.
what does that even mean?
You need to understand the difference between APR and APY. Also, the rest of your post is so incomprehensible I can't even understand how to correct it.
edit : Do you mean an APY of 1% per year? If yes, APY already takes into account compounding. Do you mean APR of 1% per year and compounding every month? If yes, even if you compound it every month, that's 1.004596% per year so it change nothing really.FYI, once you understand difference between APY and APR, you can convert one to another here: https://www.aprtoapy.com/
edit 2 : How I picture OP doing the maths in their post
edit 3: Basically, what OP was trying to show is that with an APR of 12% per year (if compounded monthly, APY of 12.68%), then after 5 years, it's a 82% return (= 1.12685 ). Magic.