When calculating the compound interest of fixed investment, the principal amount of each period is different, which is mainly used to calculate the final principal and interest value of multiple equal investments and the value of multiple equal returns. Compound interest includes intermittent compound interest and continuous compound interest. The method of calculating compound interest by year, half year, quarter and month is intermittent compound interest, and the method of calculating compound interest by moment is continuous compound interest.
Compound interest means that after each interest period, the interest and principal generated are included in the interest of the next period in the form of cost. Compound interest is to generate interest with interest, which is also commonly known as rolling interest.
Is the return of the fund compound interest?
Fund income includes fund yield and fund dividend. The rate of return of the fund refers to how much income it brings to investors in a certain period of time, so this part is simple interest;
Fund dividend refers to the distribution of part of the income to fund investors in cash, which is originally part of the net value of the fund unit. There are two ways of fund dividend, one is cash dividend, and the other is dividend reinvestment.
Cash dividend: after the fund company discovers the money for investors, investors receive the cash and do not continue to invest, so it is pure profit;
Dividend reinvestment: You want to continue to invest in the fund's dividends. If you choose this method, the system will automatically convert the dividends into corresponding shares for reinvestment. If the fund rises later, this part of the return belongs to compound interest.
Therefore, whether the fund return belongs to compound interest investment depends on whether the investor reinvests the funds.
Fund income does not compound interest every day, only the fixed investment of the fund will be calculated according to compound interest.
Compound interest income of the fund
Fund compound interest refers to the process and result of getting a high return on investment through long-term investment in the fund, while continuing to invest dividends and profits of the investment fund into the fund to realize rolling interest, just like a snowball rolling bigger and bigger. In fact, fund compound interest is to insist on long-term investment and invest in funds with very high management performance and level, so as to obtain excess returns. In reality, there are indeed a few investors who get ten times the return in ten years through long-term investment funds. This is the myth of compound interest of funds, and it is also a true fact.