# Mortgages

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Compound interest calculator.

This calculator helps you to understand how much money you can accumulate by
saving money into an account with interest compounded with different
compounding periods.

The calculator will
show you the amount that accumulates over a period of time after tax and
inflation. It assumes
that all money is earning interest at this rate throughout the period chosen.

Do not enter "$" signs or "," s between the thousands.

Note. The above calculations are approximate when you allow for taxation and
inflation. This is due to the timings of tax payments and inflation and the way
we are forced to make assumptions about these timings for these calculations.
However it does show clearly the effect of taxation and inflation.

For example. Assume you invest $10,000 for 20 years, compounding monthly at
12% per year. Traditional compounding calculations show that you have the
staggering sum of $108,925.

However, unless this money is in an IRA or other tax-free vehicle, with zero
inflation, you REALLY end up with much less in purchasing power.

For example, with the same numbers above but with an annual tax payment of
30% and 3% inflation, you end up with just $29,252 in real purchasing power
terms. In other words. Let's say that you could buy a small car today for
$10,000. Save that money for 20 years and you can buy 3 small cars, not 11.

Now try just changing the interest rate to a bank CD rate of 6% per year and
the same 30% taxation and 3% inflation. After 20 long years you end up with just
over $12,000 in today's money terms.