Hi Guys this is my new blog for Stocks and Financial planning. Iw ill give you some tips on financial planning the ones i have used.
You obviously can followthese or modify it 2 make u r own. But plz dont just follow it test it ask me questions on it n then if u r convinced u can follow it "AS I DO NOT TAKE ANY RESPONSIBILITY OFR ANY KIND OF LOSS OR ANY PROBLEM YOU COME ACROSS FOLLOWING THIS".
So lets start by talking about COMPOUND INTEREST. Some say it is the Eight Wonder of the world and i completely agree with them.
Compound Interest makes money work for u. There are many calculator for doing this ne of which i will provide at the bottom.
My first advice 2 all of u is to make u r money work 4 u. U r money can make millions with CI(Compound Interest) sitting idle it cannot do nething only deplete in value coz of inflation.
Neways but this is how the compound interest is calculated taking into account monthly additions. Do the math or use the calculator in the link below.
http://wealth.moneycontrol.com/jtcompounding.php
http://www.moneychimp.com/calculator/compound_interest_calculator.htm
One thing we need to get straight from the beginning is the timing of the interest and contributions. We're going to assume that the balance of the account for any particular year includes the interest growth from last year, but does not yet include the new contribution. (This is the way most people do it, but sometimes you'll see an example that assumes a different schedule; they will disagree with our formula by the equivalent of one year's interest and/or one year's contribution).
We'll write c for the annual contribution; and to keep things cleaner we'll write "z" for (1 + r). Now we start writing down the account balance for the first few years:
Year Balance
Now P
1 (P + c)z
2 ((P + c)z + c)z
In other words, to go from one year's balance to the next, you add on the contribution c, then multiply by z to get the interest.
If you multiply these terms out, you'll start to see the pattern emerge:
Year Balance
Now P
1 Pz + cz
2 Pz2 + c(z + z2)
n Pzn + c(z + z2 + . . . + zn)
The second part of that last line is just c times the sum of a geometric series. So you can boil the whole thing down to:
1. Balance(n) = Pzn + c[(zn + 1 - z)/(z - 1)]
Finally, write z out in terms of r, to get the formula we're looking for:
2. Balance(n) = P(1 + r)n + c[((1 + r)n + 1 - (1 + r))/r]
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