Wednesday, November 12, 2008

Holy Compunding Batman

Ok, so I'm a numbers kind of guy. I had put together a spreadsheet a month or so ago detailing how compounding would play out at varying interest rates, etc.

The simple formula to figure compounding is to take a number and multiply it by 1 and the percentage rate expressed as a decimal. For example, if you wanted to calculate a return compounding monthly, with x being the principal:

return=x*1.percentage_rate

Anyway, using that formula a 20% percentage rate would be expressed as 1.2, 30% would be 1.3, 41% would be 1.41, etc.

That being said, I put only $100 in this account to test my trading strategy before i commit all my capital to this. Based on the current rate of return, I will see a million dollars in 19 weeks?!
72 Months will see us at more money than I could possibly ever spend. And that is with the $100 initial investment. If I put in all the other money that I have set aside as an investment fund, we will do incredibly well.

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