💰 Compound interest calculator template in Microsoft Excel

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In this video we will build an Excel tool that will help us calculate the compound interest of an investment.

We're going to assume an investment into the S&P500 VOO ETF which tracks the S&P 500 index.

We need an initial deposit which for the sake of this example we'll say that this is the money that we have today and that we are going to invest, and that's 3000$.

We will take into account monthly deposits of 300$, an average interest rate of 8% which is the average real return of the S&P 500 Index since 1926 until 2018, and we're going to assume a compounding period of 25 years.

To calculate the compound interest we'll be using the FV (future value) function which is a financial function that returns the future value of an investment.

This function takes three required parameters: rate, nper and pmt.

The rate is the interest rate per period or the annual rate that our investment compounds at.

The nper is the total number of payment periods or the number of years that we will let our money compound.

The pmt is the payment that we make each period or the money that we will invest every month and every year. This should be a negative number because this is money that we invest, not money that we withdraw a,nd this formula requires a negative input for our investments.

The formula also takes two optional parameter: pv ,also a negative number - this is the initial investment, the 3000$ that we have currently and we would like to invest and a second optional parameter, type, which stands for when the payment is due - we're gonna leave it as zero which is the default, meaning that the payment is due at the end of the compounding period.

Видео 💰 Compound interest calculator template in Microsoft Excel канала Cogwheel Learning