Compounding, explained
What is it?
Interest on your deposit — and on earlier interest
Normally you receive interest on your deposit every week. With compounding you let part of that interest stay in: it is added to your deposit, and the following week you receive interest on that higher amount. Interest on interest, in other words. You decide which share grows along — between 10% and 50% — and the rest is simply paid out weekly.
Explained in one minute
This short animation shows what happens to your interest when you let part of it grow along — using an example of € 10,000.
The video is in English, with on-screen text. Turn on your sound for the narration.
What does that look like at Yieldfund, week after week? We’ll show you with Laura.
Watch along with Laura
Laura lets 30% of her weekly interest grow along with her deposit. The rest is simply paid out every week. Here is what happens, week after week:
Laura is a fictional example; amounts are rounded. The interest you receive is set out in your bond terms and conditions.
Laura chose € 10,000 and 30%. And you?
The calculator does for you what you just saw with Laura — week after week, for the whole term. Set your own amount, term and split. This is a calculation example, not a forecast.
Investing involves risks. You may lose some or all of your investment.
In four short steps
You choose your split
Per contract you indicate which share of your weekly interest grows along: between 10% and 50%. If you do nothing, you simply receive all interest weekly.
Weekly payout
The share you don’t let grow along is paid out every week on the first working day — usually Monday. That rhythm doesn’t change.
Your balance grows along
The compounding share is added to your deposit. The following week, interest is calculated on that higher amount, in line with your agreement.
Payout at the end
At the end of the term you receive your deposit plus the full compounding amount built up, as set out in your Purchase Declaration, the bond terms and conditions and the compounding addendum.
Ready to get started? You set up your split in a few minutes.
Investing involves risks. You may lose some or all of your investment.
FAQ
Frequently asked questions
Compounding means you receive interest on your deposit and on interest you earned earlier and let stay in. It is also called “interest on interest”. Every week your balance gets a little bigger, and the next interest calculation uses that bigger amount.
No. Per contract you decide yourself whether to take part and which share of your weekly interest grows along. If you choose nothing, your interest is simply paid out in full every week.
Yes. You can choose at any time to stop deferring your interest. From that moment on, your weekly interest is paid out in full again.
Between 10% and 50% of your weekly interest. The rest is simply paid out weekly on the first working day of the week, usually Monday.
At the end of the term of your contract. You then receive your deposit plus the compounding amount built up, including the interest calculated on it. Repayment depends on Yieldfund’s ability to meet its obligations.
In your Purchase Declaration, the bond terms and conditions and the compounding addendum. They state exactly which share grows along, how the interest is calculated and when payouts are made.
Yes, that risk exists. Investing involves risks: you may lose some or all of your investment. The interest and the repayment are agreements in your contract, and fulfilling them depends on Yieldfund’s ability to meet its obligations.
Questions about compounding?
In a 30-minute call, we’ll calmly take you through compounding, the terms and conditions and the risks. You ask the questions and then decide at your own pace. Our doors are also always open — in Deventer and Amsterdam.
Investing involves risks. You may lose some or all of your investment.