Bank deposits generally bear interest at an annual rate. The annual interest rate here is simple interest. In fact, all simple interest can be converted into compound interest, but the interest rate is reduced.

For example, the interest rate of 1 year bank deposit is 1.5%. If we automatically transfer the deposit once a year, the interest rate is 1.5%, which can be regarded as a compound interest deposit with a period of 1 year.

For another example, the interest rate of 1 year bank deposit is 1.5%. If we regard it as a daily compound interest product, according to the compound interest formula: f = a (1+x) n, we can calculate that the daily interest rate x is about 0.04 1%, which is equivalent to 465438 per million days.

It can be seen that compound interest and simple interest are mutually transformed, but the calculation of compound interest is complex and simple and intuitive. Therefore, everyone uses simple interest to express the income situation, and the daily interest rate products with floating income such as Yu' ebao also use the 7-day annualized rate of return.

Then, what is the difference between simple interest and compound interest in some commonly used wealth management products on the market? Let's take a look at two common financial products.

6% 5-year smart deposit

The interest rate of this product is very high. After the deposit matures for five years, the annual interest rate is 6%, and the five-year yield is 30%. So what is the conversion to adult compound interest and daily compound interest?

If the annual compound interest is calculated, F/A=30% and n=5, x=5.388%, which is equivalent to the annual compound interest of about 5.388%, which is basically similar to the income of higher one-year bank wealth management products.

If the country calculates the daily compound interest, F/A=30%, n=5*356= 1825, it can be concluded that x=0.0 1437%, and the daily compound interest per 10,000 yuan deposit is 1.437 yuan, which is about twice that of Yu 'ebao.

Five-year national debt

By the same token, in my answer yesterday, I calculated the conversion of savings bonds issued in April this year into simple interest. Because the national debt pays interest annually and the interest can be reinvested, it can be regarded as compound interest. The compound interest of five-year treasury bonds is 4.27%, and the annualized simple interest is about 4.65%. Like friends can climb the stairs to see.