How to Calculate Compound Interest

This is a simple video covering very basic interest calculations both simple and compound styles. It also goes over some insight which I hope can help a lot of people who are not familiar with doing the calculations manually.
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[@thecooperacademy]

Compound interest,the eighth wonder of the world!

[@vromerone]

*That was way more complicated than I do it. I just move the decimal over twice for the percentage. example, 6%= .06 and I multiply that by the principle, and then divide the interest by 12. So, $10,000 at 6% would simply be, .06x10,000 which is 600 and divide that by 12 which is $50 monthly. Easy-peezy :)*

[@BeatTheBush]

For any equation, you are likely able to compute is many different ways and get the same result. Glad you like the way you do it though.

[@kevinumanzor3442]

Victor D. Romero, the method you just described doesn't take into account compounding interest. That's just simple interest.

[@MichaelJayValueInvesting]

*Bonus* If you want interest compounded continuously use the following formula: A = P * e ^ (r *t) Where r is your interest rate, P is your starting amount, t is the time in years, and e is 2.71828.

[@BeatTheBush]

I think this is more of a style thing. I never liked using 'e' if I didn't have to.

[@chrislewis8593]

Thank you I truly appreciate you! I just went through 5 videos before you and they did so many complicated things it was ridiculous! What you did was simple and straight to the point.

[@BeatTheBush]

Thanks! Glad to hear this video helped!

[@SpicerCapital]

Such an important lesson! I like how you applied it to debt and to investing. It works both ways! Compound interest can leave you in ruin AND it can make you rich - you just have to make sure it is working for you not against you!

[@BeatTheBush]

I keep on thinking it's too simple but I have to do it to build the base for other things.

[@FutureNow]

Snorlax getting a nice tan.

[@BeatTheBush]

=D

[@dylongarrett4779]

You took an important principle and made it super easy to understand. Awesome! 👏

[@BeatTheBush]

Thanks! I know it's a bit simple but yup, this is a fundamental that can have more difficult stuff later as needed.

[@jamesthacoolcat9926]

Compound interest is awesome for investing.

[@beaviswealth]

Snorlax... don't do it! You can also use a financial calculator :P

[@BeatTheBush]

I might have drove him mad from all the math talk. I didn't realize it annoyed him so much.

[@Naturenerd1000]

That x 1.1 trick is a cool short cut. Less confusing. x 1.08= 8% 1.09 = 9% 1.12 =12% 1.31 =31% would 1.3% interest be x 1.013 if they have some number like that?

[@BeatTheBush]

Correct.

[@mohonest_98agd57]

Fact 😎

[@chrishammond5001]

Your explanation of math is great.

[@BeatTheBush]

Thanks!

[@dylankrid]

A fan meet up in Dallas TX would be very cool :)

[@es-ph6pg]

hey please do a video on real estate investing - buying and renting out properties. Thanks

[@BeatTheBush]

No experience in that so no vids on that.

[@praggypopsqa4652]

Loving the graphics.

[@sf7234]

More videos like this please

[@BeatTheBush]

Will do!

[@CXS-qo7qn]

Nice video i was searching about it yesterday thanks

[@BeatTheBush]

You're welcome!

[@michaelvarney.]

Compounding continuously greatly simplifies the math and the representation. A = P Exp(r t) Interest rate = 8%/year, time = 10 years, principal = 10000 A = 10000 Exp(0.08*10) Fewer keystrokes on the calculator, so more efficient... which I know you like. ;)

[@BeatTheBush]

Something about over estimating that makes me feel uncomfortable. Even if it is just by a little.

[@michaelvarney.]

Back of the envelope, rules of thumb, Fermi Problem Solving, are the true power. Plus there are quick ways to compensate for the small delta overage. Also, if people had come up with the concept of time value of money during and age of modern computers, they likely would have gone straight to the limit, I.E. using Exp(x). They only used the approximation because it was easier to tabularize in the pen and paper era. There is a book that you might like called "Dead Reckoning" www.amazon.com/Dead-Reckoning-Calculating-Without-Instruments/dp/0884150879

[@NickKravitz]

Your credit card balance calculation at 1:55 should be $201.50. The monthly interest is calculated on the average balance, but this gets added to the ending balance not the average balance.

[@BeatTheBush]

HA HA HA !!!! You are RIGHT!

[@leskateurdudimanche8157]

Can we get good credit in Europe ? How do you choose ?

[@silviag3798]

😄 LOLcat and IceBat are literally two peas in a pod!!🤣

[@BeatTheBush]

=D =D =D You used her name!

[@silviag3798]

BeatTheBush Wasn't I already doing that?

[@praggypopsqa4652]

Not literally. They would have to be peas, but they are literally in a pod.

[@Papeeshka]

Love it

[@neweast5991]

BeatTheBush interesting about interest % 👌

[@BeatTheBush]

Basic. But I feel some will look this up and hopefully find this video.

[@neweast5991]

BeatTheBush : ok BeatTheBush Basic Level. Maybe next time BeatTheBush Intermediate Level ? 📈

[@jerrydesu]

I like the rule of 72 ~ for example, if you want to double your money in six years, divide 6 into 72 to get the required interest rate ~ which would be about 12 percent.

[@BeatTheBush]

For doubling... that's a good one too. Someone talking about using rule of 72 with .06 so everything was off by 100. No amount of logic will convince them otherwise.

[@emiami6700]

6% divided by 12 = .005 not .5......what am I missing here?

[@BeatTheBush]

0.5% = 0.5%/100 => 0.005

[@xev790]

So i just pay in April ?

[@BeatTheBush]

Lol.

[@es-ph6pg]

Can you do dance videos like Qpark?

[@BeatTheBush]

Probably not, it looks embarrassing.

[@es-ph6pg]

Thanks for your quick reply.

[@christiantorres1487]

Snorlax don’t jump!

[@BeatTheBush]

Seems like he hates math.

[@zzzcocopepe]

Kakellate

[@jenjen526]

Compound interest is they 8th wonder of the world. It works both ways toward debt and investing. It’s how you got out of your engineering gig and it’s how I will be able to buy my freedom out of Wall St slavery sooner than later hopefully

[@BeatTheBush]

Why ever time I read about ppl working in Wall St. they describe it as such a corrosive environment? Where is all the sailing in easy money?

[@jenjen526]

I could have a KZbin channel dedicated to this topic! Basically, it’s an antiquated old school industry where expectations to sweat blood at work is the norm, management usually has no idea what is going on and throws others or the workers under the bus, to pass blame or get ahead. Constantly need to cover our asses not to get fired or yelled at. There are lies about promotions or raises, and there is still inequality, pay/promotions for women and minorities. However with all that said, I do analyze portfolio performance and do find it interesting when reviewing performance and attribution for high net worth clients

[@BeatTheBush]

I've had management lied to me before. I quit very soon after. Well, it was a private equity take over so they were just figure heads trying to calm the troops.

[@chrisobiora7399]

just had my maths gcse and this did not come up

[@BeatTheBush]

Interesting because I feel this is extremely important for day to day life.

[@TechGeneral]

BeatTheBush the school I went to learnt about simple and compound interest, this is in Australia btw