Compound Interest for Stocks? QUESTION

Hi there,

I am wondering as it is not explained anywhere or i may not be able to find the information about it regarding T212 compound interest.

Can someone from T212 please explain how the compound interest works:

Which of the following method is correct, how it is calculated as a compound interest:

  • the 24hr cycle of pre market > market open > after market = 1 day
  • just market open to market close
  • 24 hours then added on

When is it added onto the interest? Does it calculate all 3 processes before compounding as in pre market, market open and after market?

Most brokers take into consideration the pre market, market open and then after market before adding the compound interest for the day?

Many thanks.

Are you refering to the daily interest on the free cash available in your account?

Hey, @LearnerEarner :wave:

We offer compound interest when it comes to the interest you earn on your uninvested funds. There are more details about the whole process in this article, and the formula used to calculate the interest is the following:

(1+r/n)^n - 1, where

  • r = interest rate
  • n = compounding frequency (365.25 days - .25 as we account for leap years)

When it comes to interest earned on your shares via share lending, compound interest cannot be guaranteed, as share lending is based on supply and demand.

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I am referring to stocks i hold, not uninvested funds.

As a fellow customer and as far as I’m aware, T212 does not calculate compound interest on any stock investments.

For example:
Say you had bought a specific stock or a specific ETF named “XYZ plc” listed in Pounds Sterling (GBP or £) in the London Stock Exchange and you bought 10 shares at £5 per share for a total of £50.

If say 2 months later, you checked how much it was worth T212 would simply look at the current stock price, say £7 a share and multiply it by your number of shares and show you it is currently worth £70 which is £20 over the price you bought them for.
This £20 difference would then be indicatively shown as a +40% increase, as £70 is 40% higher than rhe initial £50 invested. This would only be indicative as you don’t actually “receive” any money until you sell the stocks or ETFs.

Remember, money can be lost very quickly in the stock market. Don’t invest unless you understand the investments.
Please seek financial advice from a professional if you need help to understand things.
I am just a fellow T212 user.