Ever use a financial calculator?
If you haven’t, you probably should.
Ever see those big, beautiful bank buildings?
There’s a reason they can afford to put their business in there. They understand and ‘bank’ on the power of the Time Value of Money (TVM). Compound interest is what Albert Einstein dubbed as ‘the 8th wonder of the world’ and what Warren Buffet, the second richest man in the world, described as the key that grew his wealth.
The TVM concepts are simple...
Many of the calculators that calculate them are not. Besides, who uses calculators in this day and age when everything you need can be stored on your cell phone?
Compound interest is interest added to the principal investment. Over time, you can think of it as ‘interest on interest.’ It makes your money grow faster than just simple interest. In the real estate industry, if the prices of houses are rising, each year’s growth adds up to an increasingly higher base. If you own a $400,000 property with a growth rate of 5% per year, after a decade its worth will be $650,000.
The Time Value of Money is the idea that your cash now is worth more than the same amount in the future.
If someone offers you $100 today or a $100.25 a year from now, you would want to take the $100 today probably. Even if you invest that $100 with a 0.5% return (like in a CD), you will be ahead by $0.25 ($100.50) a year from now.
We’re basically like kids. We want things NOW!
An Easy to Use TVM App
Compoundee, developed by GoodHumans, is a simple and easy-to-use financial calculator that makes solving for compound interest, annuities and the Time Value of Money easy as pie (no pun intended).
This app lays out how much money you are going to make based on your savings and investments. It’s also able to change variables and lets you know what you need to achieve your financial goal.
If you’ve been eyeing a property for the longest time and you want to evaluate different scenarios for your return, Compoundee calculates how much your investment will be worth over a period of time, and lets you know your payments if you know your interest rate.
Many people are just interested in how much their payment is. With Compoundee, you can also easily structure owner financing to maximize your interest rate while setting your buyer’s payments at a level they can afford.
The best part about Compoundee is that you do not have to take a four-year college course majoring in business finance to use it.
It just prompts you to put in variables such as principal, interest rate and length of loan. Compoundee figures it all out for you.
You can do all this on your phone anytime, anywhere. You can also email your calculation and other information to your employees, accountant, agent or anyone you want. As of now, Compoundee is only available on iOS devices.
What Are the Features?
Here are some of the awesome features you get when you download Compoundee:
• Clean, user-friendly interface
• Solve for any of 5 different investment variables
• Compound daily, quarterly, annually & more
• Periodic deposits or withdrawals
• Inflation and tax adjusted amounts
• Amortization shows per period interest
• Account for extra annual deposits
• Specify deposits at beginning or end of period
• History of most recent entries for each input
• Send calculations through email
• Bookmark saved calculations for easy retrieval
• See all your results in itemized detail
• Two-day counting options
• Offline user guide built right into the app
• Supports extremely large values
• Supports long durations (thousands of years)
• See results as you type
• Native iPad interface
The app is compatible with iPhones, iPods, and there is an HD version for iPads. You can download them on the App Store for $2.99.
Talk to Me
Have you tried other financial calculators? How do they compare with Compoundee? Let us know in the comments below.
Pay Attention to Your Finances – At the end of the day, it’s not how much you make. It’s how much you keep. Understand concepts like TVM to stop money from flowing away from you.
Get a Financial Calculator and Use It – If you don’t feel like Compoundee is for you or you need other tools to ensure accurate calculations, there are tons of other financial calculators that can help you with your money.
Brainstorm How to Use Compound Interest – Structuring deals using owner financing has made a lot of investors a whole lot of money.
JP Moses
is a real estate investor in Memphis, TN, with experience ranging from land lording to note buying, rehabbing, and wholesaling. However, wholesaling is the area that he enjoys most and where he bring the most experience and expertise to his students.