Daily Apy Calculator

Daily APY Calculator

function calculateDailyAPY() { var initialInvestment = parseFloat(document.getElementById('initialInvestment').value); var annualRate = parseFloat(document.getElementById('annualRate').value); var numDays = parseInt(document.getElementById('numDays').value); if (isNaN(initialInvestment) || initialInvestment < 0) { alert('Please enter a valid non-negative initial investment amount.'); return; } if (isNaN(annualRate) || annualRate < 0) { alert('Please enter a valid non-negative annual interest rate.'); return; } if (isNaN(numDays) || numDays < 1) { alert('Please enter a valid number of days (at least 1).'); return; } var aprDecimal = annualRate / 100; var dailyRateDecimal = aprDecimal / 365; // Calculate Daily Compounding Rate var dailyCompoundingRate = dailyRateDecimal * 100; // Calculate APY var apyDecimal = Math.pow((1 + dailyRateDecimal), 365) – 1; var apyResult = apyDecimal * 100; // Calculate Future Value var futureValue = initialInvestment * Math.pow((1 + dailyRateDecimal), numDays); // Calculate Total Interest Earned var totalInterest = futureValue – initialInvestment; // Calculate Average Daily Interest Earned var avgDailyInterest = totalInterest / numDays; document.getElementById('dailyCompoundingRate').innerText = dailyCompoundingRate.toFixed(4) + '%'; document.getElementById('apyResult').innerText = apyResult.toFixed(2) + '%'; document.getElementById('futureValue').innerText = '$' + futureValue.toFixed(2); document.getElementById('totalInterest').innerText = '$' + totalInterest.toFixed(2); document.getElementById('avgDailyInterest').innerText = '$' + avgDailyInterest.toFixed(2); } // Initial calculation on page load for default values document.addEventListener('DOMContentLoaded', calculateDailyAPY);

Understanding the Daily APY Calculator

The Daily APY Calculator helps you understand how your investments grow when interest is compounded daily. While many financial products advertise an Annual Percentage Rate (APR), the true return you earn, especially with frequent compounding, is often higher and is represented by the Annual Percentage Yield (APY).

APR vs. APY: What's the Difference?

Annual Percentage Rate (APR) is the simple interest rate for a year, without taking into account the effect of compounding. It's the nominal rate you're often quoted for loans or savings accounts.

Annual Percentage Yield (APY), on the other hand, is the effective annual rate of return, taking into account the effect of compounding interest. When interest is compounded more frequently (e.g., daily, monthly, quarterly), the actual return you receive will be higher than the stated APR because you start earning interest on your previously earned interest.

How Daily Compounding Works

Daily compounding means that interest is calculated and added to your principal balance every single day. This new, slightly larger principal then earns interest the following day, and so on. This continuous growth, even if small on a daily basis, can lead to significant gains over time compared to interest compounded less frequently (e.g., annually).

For example, if you have an investment with a 5% APR compounded daily, you're not just earning 5% of your initial principal at the end of the year. Instead, you're earning (5% / 365) each day on your current balance, which includes all the interest earned on previous days. This is why the APY will be slightly higher than the APR.

Using the Daily APY Calculator

Our calculator simplifies this process for you. Here's how to use it:

1. Initial Investment Amount: Enter the starting amount of money you are investing or depositing.
2. Stated Annual Interest Rate (APR) (%): Input the annual interest rate as a percentage (e.g., enter '5' for 5%). This is the nominal rate before compounding.
3. Number of Days to Compound: Specify how many days you plan for the investment to compound. For a full year, you would typically enter 365.

What the Results Mean:

• Daily Compounding Rate: This is the actual percentage rate applied to your balance each day (APR divided by 365).
• Annual Percentage Yield (APY): This is the true annual rate of return you will earn, considering the effect of daily compounding. It will always be equal to or higher than the APR when compounding occurs.
• Future Value of Investment: This is the total amount of money you will have at the end of the specified number of days, including your initial investment and all earned interest.
• Total Interest Earned: This shows the total amount of interest your investment has generated over the compounding period.
• Average Daily Interest Earned: This is the total interest earned divided by the number of days, giving you an average of how much interest you gained each day.

Example Scenario:

Let's say you invest $1,000 in an account that offers a 4% APR, compounded daily, and you want to see its growth over 365 days.

• Initial Investment Amount: $1,000
• Stated Annual Interest Rate (APR) (%): 4
• Number of Days to Compound: 365

The calculator would show you results similar to these:

• Daily Compounding Rate: 0.0110%
• Annual Percentage Yield (APY): 4.08%
• Future Value of Investment: $1,040.81
• Total Interest Earned: $40.81
• Average Daily Interest Earned: $0.11

As you can see, due to daily compounding, your effective annual return (APY) is 4.08%, which is slightly higher than the stated 4% APR, leading to an extra $0.81 in interest over the year compared to simple annual interest.