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I don't understand the math. I put in 2000 monthly rent, initial investment 50000, and 36 months of stay. That spits out a return of 72784, so my capital grew b
by tom_mellior 7y ago
I don't understand the math. I put in 2000 monthly rent, initial investment 50000, and 36 months of stay. That spits out a return of 72784, so my capital grew by 22784 dollars. In other words, in this particular example, 632.89 dollars per month were saved up for me. How is this 7% of something? What's the formula for calculating this?
I first thought the system might be crazy and promise 7% monthly compound interest since 2000 * 1.07 ^ 36 = 22847.88, which squares pretty well with the number above. But doubling the time to 72 months only grows to a "profit" of 63000 dollars rather than 261000. So that's good, but then I don't understand how this is calculated.
- fvryan 7y agoThe Initial Investment and 7% of rent are two separate mechanisms that contribute to the ending investment value at the end of the term. Your initial investment will grow at an annual rate based on the performance of the fund + 7% of your rent will be contributed.
- tom_mellior 7y agoOK, so most of the return is based on the initial investment, not the rent? And it's based on an assumed annual rate that you cannot guarantee and that you don't even disclose in the example? That doesn't inspire confidence.
- fvryan 7y agoIt depends on the initial investment size, if the initial investment is large enough then it will make up a larger portion. The projected annual returns are listed on the /invest page.
- tom_mellior 7y ago> The projected annual returns are listed on the /invest page. Gotcha, thanks. It would be really good to have a bit of that information next to the calculator on the landing page.
- TenaciousValor 7y agoYou may find my post in this thread useful. https://news.ycombinator.com/item?id=20683615 https://news.ycombinator.com/item?id=20683615