Subroutines for calculating compound interest.
2018 Update: While I still find the below documentation more fun to read that strictly facts documentation, I wanted to disclose I did make money, but no where near my my predictions.
I started a Lending Club account. While waiting on it to open I thought, What if I put in $5000, and assume I will make the minimum 6%? I can leave it alone and just come back after those three year notes done. What will that look like?
use Finance::CompoundInterest;
say compound_interest
5000, # My initial payment, or principal
.005, # Since it compounds monthly and that 6% really means yearly, it should be .06 / 12
36, # Number of months we expect it to compound.
3; # At year 3 how will this look.
5075.56003652364
Well that's kinda cruddy. I can't retire to the Bahamas on that. I can't own a luxury yacht with a butler. Oh wait, for that matter I don't actually have $5K lying around. I live paycheck to paycheck like most everyone else I know.
What if I throw $150 a month into it, every month, for the next three years. How is it gonna look then?
say compound_interest_with_payments
150, # $150 every month.
.005, # I wish that was .06 monthly
36; # Number of months we expect it to compound.
5900.41574470244
Woohoo! I already out performed the first one! Using some multiplication and subtraction, I can see that I put in a little more money $5400, but I got way more interest out. $500 in interest. ChaChing!
What is this gonna look like if I can keep it up until I am 75? Lets see I'm 32 now, so I got another 43 years.
say compound_interest_with_payments
150, # $150 every month.
.005, # .06 / 12
43 * 12; # Number of months we expect it to compound.
363377.142315735
Now that is a chunk of change, and I only put in $1,800 a year.
But wait, I am a programmer. I am totally smarter than all those other guys that use their gut to choose stocks, loans, ponies, etc. I can use spread sheets databases, to comb through the data and make better choices.
Lending Club says their returns are between 6% and 10%. Lets assume I can hit that 10% mark. How many payment periods will it take me to get to the same dollar amount?
say ciwp_payment_period
363377, # Final amount.
.0083, # We gotz skillz. 10% anually.
150; # Monthly payments.368.944160846191
Sweet, so I went from 516(43x12) contributions to 369(30.75x12). Sweet, almost 13 years saved! I knew learning spread sheets databases would pay off someday.
Hold on, not only am I a programmer, but I am a proper lazy Perl programmer. I don't wanna be working until I am 75, or 63! I wanna go live on that island, programming Perl, and sipping Mojitos sooner rather than later.
How much $$ do I need to put in to get this done in 20 years at age 52? Just over the hill, and out the door.
say ciwp_payment_size
363377, # Final amount.
.0083, # Interest.
20 * 12; # Number of months we want it to compound.481.012899065815
About $481 a month? That's a bit rough, but doable. Island life is the life for me!
These modules were created to scratch my own itch. They do some simple financial calculations related to compound interest, so I can count my imaginary money.
James (Jeremy) Carman developer@peelle.org
This README is shamelessly based on other Perl6 modules. So is my module layout, tests, and other not code files. Thank you for figuring this out first so I didn't have to.