Money Market Calculator with Dividends

Money Market Growth Formula:

\[ A = P \times (1 + r/n)^{n \times t} + \Sigma(Dividends \times (1 + r/n)^{n \times (t-Dividend\ time)}) \]

Principal (P):

Annual Interest Rate (r):

decimal

Compounding Periods per Year (n):

Time (t):

years

Dividends (comma separated):

Final Amount (A):

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1. What is the Money Market Growth Formula?

The Money Market Growth Formula calculates the future value of an investment considering compound interest and reinvested dividends. It provides a comprehensive view of investment growth over time.

2. How Does the Calculator Work?

The calculator uses the formula:

\[ A = P \times (1 + r/n)^{n \times t} + \Sigma(Dividends \times (1 + r/n)^{n \times (t-Dividend\ time)}) \]

Where:

$ A $ — Final amount ($)
$ P $ — Principal investment ($)
$ r $ — Annual interest rate (decimal)
$ n $ — Compounding periods per year
$ t $ — Time in years
$ Dividends $ — Dividend amounts and their investment times

Explanation: The formula calculates compound interest on the principal and each dividend payment, accounting for when each dividend was received.

3. Importance of Dividend Reinvestment

Details: Reinvesting dividends can significantly boost investment returns over time due to compounding. This calculator shows the combined effect of both principal growth and dividend reinvestment.

4. Using the Calculator

Tips: Enter principal amount, annual interest rate (as decimal), compounding frequency, investment period, and any dividends (as "amount,time" pairs separated by spaces). All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: How often should compounding periods be set?
A: Match your money market account's actual compounding frequency (monthly=12, quarterly=4, daily=365).

Q2: What's the best way to enter dividends?
A: Use "amount,time" format where time is years since investment start (e.g., "100,0.5 50,1.2" for $100 at 6 months and $50 at 1.2 years).

Q3: Does this account for taxes on dividends?
A: No, this calculates gross returns. For net returns, reduce dividend amounts by your expected tax rate.

Q4: Can I use this for other investments?
A: While designed for money markets, it works for any investment with regular compounding and dividend payments.

Q5: Why is my result different from my actual account?
A: Actual returns may vary due to changing interest rates, fees, or dividend amounts not accounted for here.