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The way APY works is actually kind of tricky. What's really happening is you get a lower interest rate on your money every month, but you gain interest on that interest payment, so over the course of a year, you've actually made 5.5% of your original investment.
Example:
you put $1,000 into a bank account with 5.56% APY. You're really getting 5% per month, compounded. So,
Month 1: $1,050 ($50 in interest)
month 2: $1102.5 ($52.5 in interest)
etc...
month 12:$1795.86
$1000 / $1795.86 = 5.56
The APY figure is assuming that you don't touch your investment for a full year.
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Quote:
Originally Posted by fastball
"Some legends just live in your dreams, others never let you sleep!"
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