Finances

What is the capitalization and prolongation of the deposit + instructions on how to choose a deposit with replenishment and capitalization

January 12, 2020

Hello, Dear readers of the financial magazine "RichPro.ru"! Today we will tell, what is the capitalization and prolongation of the deposit, as well as which banks offer deposits with interest capitalization and replenishment.

It's no secret, that bank deposits are one of the most popular options for investing free funds in Russia. That is why the study of the parameters of deposits continues to be relevant.

Having studied the submitted publication from beginning to end, readers will learn:

  • What is the capitalization of interest on the deposit account and how often it can be carried out;
  • What does the prolongation of the deposit and what are its conditions?;
  • Where you can make profitable deposits with a capitalization of prolongation, as well as replenishment;
  • How not to be mistaken, choosing a deposit with capitalization.

in addition, the article contains instructions on that, how to choose the right contribution with capitalization, how to extend the contract. Also at the end of the publication, we traditionally answer the most troubling questions on this topic.

Knowing the basic terms of the deposit is useful to all - those, whose deposit has already been opened; team, who is just planning to invest in a bank; as well as those, who simply increases financial literacy. About all, which is important to understand, read on right now!

About that, what is the capitalization of interest on the deposit account, what the extension of the deposit means and under what conditions it occurs, how to choose a deposit with replenishment and capitalization - read this article

1. What is the capitalization of the contribution - an overview of the concept + example of calculating the deposit with interest capitalization

In Russia, bank deposits (deposits) retain their leading positions for a very long time, as a way to save and increase money. They are popular among individuals, and among organizations. Become, age, income level and other demographic parameters do not matter.

Most citizens understand, what is a bank deposit. However, not everyone can define capitalization.

so, what is the capitalization of interest on the deposit account?

Capitalization of interest on the deposit account is a supplement to the accrued income for a certain period to the funds invested in the deposit.

In other words, if there is a reference to the capitalization of interest in the terms of the deposit, they regularly increase the amount of the deposit. The result of such a process is that, that in the future interest is accrued not only on the invested amount, but also on accrued income.

Example of calculating interest on a deposit with capitalization

Fully understand the essence, as well as evaluate capitalization benefits, can only be compared for example Two варіанти нарахування відсотків. At the same time imagine, that the amount of the deposit is the same - 100 thousand rubles.

Naturally, the rate for different programs differs. However, for ease of comparison, let's assume, that the percentage is the same and is 12% annual (One% per month). For example, let's say, that interest is accrued monthly on the last day of the month. Term, on which funds are placed, in our case it will be 3 months.

Comparative characteristics of interest accrual on deposits with capitalization and without it:

Sequence number of the interest accrual period(moon) Deposit without capitalization Contribution with capitalization
The amount on the account, on which interest is accrued The amount of income The amount on the account, on which interest is accrued The amount of income
1 moon 100 000,00 1 000,00 100 000,00 1 000,00
2 moon 100 000,00 1 000,00 101 000,00 1 010,00
3 moon 100 000,00 1 000,00 102 010,00 1 020,10
The total amount of income 3 000,00 3 030,00

From the example you can see, that investing in a deposit with capitalization, the investor will get more profit. In our example, the difference was total Thirty rubles.

However, it should be borne in mind, that in practice investors invest a much larger amount. More, such short terms are rarely used, and the longer the placement period, the more significant will be the difference in income. More about that, how and where to invest money, we wrote in a separate article in our magazine - we recommend reading it carefully.

Terms of capitalization of interest on deposits

2. How often can interest be capitalized on a deposit account?

The presence or absence of capitalization for a particular contribution is determined by its terms, which are confirmed by the contract. The same can be said about the periodicity of capitalization, which may be different.

Most often, the regularity of capitalization is as follows:

  • 1 once a day;
  • weekly;
  • monthly;
  • once a quarter;
  • 1 once every six months;
  • annually.

To understand, what periodicity of capitalization is the most profitable, it is best to make calculations, which will allow you to clearly see the result.

Example, it is permissible to make a deposit 100 000 rubles for six months. Thus for simplicity of calculation we will accept the rate for 12% per year (1% monthly).

The result of the calculations is presented in the table.

Comparative table of deposits with different periodicity of capitalization:

Settlement period number Amount at the beginning of the period Accrued interest Amount at the end of the period
At capitalization 1 once every six months
One 100 000,00 6 000,00 106 000,00
With quarterly capitalization
One 100 000,00 3 000,00 103 000,00
Two 103 000,00 3 090,00 106 090,00
Monthly capitalization
One 100 000,00 1 000,00 101 000,00
Two 101 000,00 1 010,00 102 010,00
Three 102 010,00 1 020,10 103 030,10
Four 103 030,10 1 030,30 104 060,40
Five 104 060,40 1 040,60 105 101,00
Six 105 101,00 1 051,01 106 152,01

These calculations allow us to understand, which brings the most income capitalization of interest with maximum regularity.

Instructions for choosing a deposit with replenishment and capitalization of interest

3. How to choose a deposit with capitalization and replenishment - a step-by-step guide for novice depositors

From the previous paragraphs of the article it becomes clear, what is the essence and benefit of capitalization. However, today the market has a huge number of banks with different conditions and rates. He, who chooses the optimal contribution for the first time, may get lost.

Therefore, we present below step-by-step guide optional deposit with interest capitalization for novice depositors.

Stage 1. Choice of bank

Prior to the development of Internet technologies, the issue of choosing a bank to conclude a deposit agreement was not so acute. Traditionally, citizens were sent to the branch of a credit institution, located in the immediate vicinity of the house or place of work.

Today, thanks to the opportunity enter into a contract online, depositors easily cooperate with banks, they do not even have branches in the city where the citizen lives.

On the one hand this approach significantly increases supply, that is, investors can choose the best option from more conditions.

However a huge selection leads to that, that newcomers' eyes are wide open. In this situation, making the right decision becomes much more difficult.

Opening a deposit in the bank next door, it is possible independently assess the competence of employees. The location and quality of repairs in the office also indicate the reputation of the credit institution. in addition, collect real, genuine reviews in this case are much easier, than when concluding a contract online.

Experts recommend, choosing a bank, first of all pay attention to it rating. This is worth a visit Internet portal of the Bank of Russia. Here is information about all the parameters of credit institutions. in addition, it is on this site that you can find information about banks, who have any problems.

Naturally, it is not necessary to bring funds to institutions with a dubious reputation even in those cases, when they participate in the deposit insurance system. Invested money, will certainly return, but interest during the bankruptcy proceedings and payments to depositors will be lost.

Only after that, how some of the most interesting banks will be selected, you can start analyzing and comparing the terms of deposits.

Stage 2. Analysis of deposit conditions

Having determined what requirements the depositor has for deposits, the conditions of the programs should be carefully studied, that fit these criteria.

Most often, investors pay attention to the following parameters:

  • rate;
  • term;
  • the minimum amount.

Another important criterion is opportunity replenish the contribution or partially removed money from him without interest losses. These parameters increase the mobility of funds in the case of their placement for a long time.

In other words, the depositor can raise funds, regularly making additional contributions to the contribution. It is important to pay attention, that banks often set a minimum amount of such replenishments.

On the other hand, not easy to predict, when money may be needed in the long run. Therefore, it is advantageous to place funds on the terms, which allow for partial removal.

It should be borne in mind, when depositing with the possibility of partial withdrawal if necessary, you can withdraw a certain amount, without breaking the agreement. Banks usually set such deposits the size of the minimum balance on the deposit account, which must be on it throughout the term of the contract.

Choosing deposits with the condition of capitalization, it is important to pay attention to its regularity.

Stage 3. Calculation of the effective rate

Choosing a deposit from several possible options, you should compare the wrong rates, which are specified in the conditions, a effective. They provide an opportunity to conduct a proper analysis of total real income from the conclusion of the contract to its closure.

In cases where there is a capitalization parameter in the deposit conditions effective rate allows you to take into account the accrual of interest on interest.

Financiers propose to determine the effective rate according to the following formula:

, where:

  • EU - effective rate;
  • WITH - interest rate on the deposit, specified in its terms;
  • N – shows, how many times the capitalization is carried out during the year.

Consider the calculation of the effective rate by example.

Example, умовами вкладу передбачена ставка 12% annual with monthly capitalization. Substituting this data into a formula, we receive:

So, capitalization in this case leads to an increase in the annual rate more than on 0,5 percent. Placing funds under 12% annual with monthly capitalization, the depositor will receive an annual passive income of 12,68% from the amount paid on deposit.

Not everyone knows how to use an engineering calculator, which allows you to reduce the number to any power. Therefore, we recommend using special online calculators.

Don't forget either, that the received income is influenced also by introduction of additional contributions, which increase the amount of the deposit. Naturally, in this case, the amount of accrued and capitalized interest increases.

The opposite judgment is also true - partial withdrawal of funds from the account leads to a decrease in income.

Stage 4. Analysis and comparison of data obtained during the calculation

Using the formula described above, you need to calculate the effective rate for all selected deposits.

Analyzing other criteria and comparing the results of calculations, you can make the right choice in favor of one of the deposits.

When comparing deposits are usually considered:

  1. The term of the contract is possible;
  2. Availability and frequency of capitalization;
  3. The size of the effective bid;
  4. Possibility of replenishment, as well as partial withdrawal;
  5. The presence or absence of the condition of prolongation.

Stage 5. Choosing the best option for investing

Most often, citizens decide to enter into a deposit agreement with the bank in order to increase funds. Therefore, the income will be of paramount importance when comparing several deposits and choosing one. Keep in mind, that from the income on the deposit will have to pay tax.

It is important to know! Today PDFO levied on all profits, a only from that part of it, which is calculated as the difference between the interest on the deposit and the refinancing rate, increased by 5 points. In this case, in favor of the budget will be transferred 35%.

Consider the following example.

Example of calculating the amount of personal income tax

WITH 28 April 2017 year in Russia there is a refinancing rate, equal 9,25%. The depositor decides to invest the cash in it 100 000 rubles under 16% annual.

In this case, the calculation of the tax amount is as follows:

  1. Taxable interest = (16 – (9,25 + 5)) = 1,75%
  2. Taxable amount = 100 000 * 1,75% = 1 750 rubles
  3. PDFO = 1 750 * 35% = 612,50 rubles

In other words, depositor instead of promised 16 000 rubles will receive in a year 15 387 rubles 50 pennies.

So, even with today's variety of proposals for deposits, it is quite possible to choose the best. For this importantly take your time, perform all necessary calculations and compare the results.

What does the prolongation of the contribution - an overview of the concept + terms of extension of the deposit in the bank

4. What is the extension of the deposit and on what terms it is provided?

In the case of a client's deposit on the deposit between the depositor and the bank is concluded accordingly contract. It establishes the conditions for cooperation between these parties, including terms, on which the money will be placed.

Traditionally, the minimum term of the deposit is 3 months. But there are banks, ready to enter into an agreement for the period from Thirty days. The maximum term is often equal to One—Two years. In addition to the length of the period, on which the contribution is placed, must be stated in the contract, or on the selected deposit prolongation.

Prolongation of the deposit - is an extension of the term of the depositor's funds in the bank account, which provides for the accrual of interest thereafter, as the main term of the contract expires.

Allocate 2 type of prolongation:

  1. Non-automatic. If the contract does not contain a reference to the extension, the depositor at the end of the deposit will have to contact the bank. There are two scenarios: withdraw own funds or enter into a new contract.
  2. Automatic. This extension is an extension of the deposit without concluding a new agreement. It turns out, that the client does not have to contact the bank, if he does not plan to withdraw his funds. Traditionally, the number of automatic extensions is unlimited. If the terms of the deposit allows several of them, this must be specified in the contract.

It turns out, that an important difference between automatic prolongation and non-automatic is the lack of need to enter into a new deposit agreement to extend its term.

In the case of automatic prolongation, the most important parameter, which worries any investor, is the size of the new interest rate. It is important to study it carefully at the time of concluding the contract, after all, there must be a separate item on the interest rate.

Very rarely a new deposit rate remains at the same level, as before. This is primarily due to the downward trend in interest rates on deposits in Russia.

You should pay attention, that most often at automatic prolongation the percent for a new term is established at that level, currently operating under the same program. However, in some cases the same deposit in the bank no longer exists. In this case, probably, the money will be transferred to a similar contribution.

It is important to keep in mind, that in the absence of automatic prolongation, interest will not be accrued at all, or an account-level bid will be set on demand. Therefore, ideally, regardless of the presence and absence of automatic prolongation, on the expiration date of the deposit should contact the bank, in which it is open.

It is important to understand not only whether or not a prolongation is envisaged for a particular contribution, but also under what conditions it will be carried out. The most important of them are described below.

Condition 1. Term of prolongation

Most often, the deposit agreement is extended for the same period, on which it was originally concluded.

For example, when making a deposit on Twelve months for the first time, it will continue for the same number of months later.

The investor must understand, that in some cases the term of the contract after the extension may differ from the original. This condition will be specified in the contract.

Condition 2. Start date of the next deposit period

Traditionally, the new deposit period begins the day after the previous one.

In other words, if the contribution ends One August, but its owner will not come to the bank, already with Two August will see the beginning of a new period.

But do not forget, that here too there are reservations on the terms of the deposit. That is, this rule applies, unless otherwise specified in the contract.

Condition 3. Change in interest rate upon extension of the deposit agreement

At prolongation of the contract it is usually established new interest rate. Most often it is equated to that, acting on the same contribution at the moment.

To know, at what percentage the funds will now be placed, it is worth paying attention to the information, which is contained on the bank's website, or call the hotline. In any case, the contract must contain information on the percentage after the extension.

Condition 4. Constancy of the new rate

After, as the contribution will be extended, during the bid extension period NOT will change.

That is, when extending the deposit for one year, during this period the percentage will be constant. The rate will change again only in the case of another extension.

Condition 5. Enrollment of interest in the deposit amount

If the depositor does not charge interest during the term of the deposit or after its expiration, at prolongation the profit is capitalized. It turns out, that during the new term interest will be accrued on the increased amount, which consists of the initial investment and accrued income.

So, absolutely all the conditions of prolongation are described in detail in bank deposit agreement. It is important to carefully study the terms of this agreement, otherwise you may suddenly find yourself in a difficult situation.

Consider 2 cases are common:

Case 1. The deposit has expired, but the depositor was unable to visit the bank in time.

As a result, in a few months, when he applied to a credit institution, learned, that interest from the expiration of interest at the rate of demand, which is equal to everything 0,01%. This is due to the lack of the condition of automatic prolongation. I had to sign a new contract, but no one will charge interest from the end of the deposit.

Case 2. The contract provided for automatic prolongation, therefore, the depositor decided not to go to the bank after its expiration.

However, he did not pay attention, that the extension is carried out at a new rate, currently operating in the credit institution. As a result, the percentage was reduced. At the same time in another bank it was possible to place funds at a higher rate. It turns out, that the investor again lost part of the potential income.

Instructions on prolongation of the deposit agreement

5. How to extend a bank deposit - 5 simple steps for beginners

It is useful for novice investors to know, how the deposit is extended. First of all, worth it carefully examine the terms of the contract. If it contains a clause on the presence of automatic prolongation, it is necessary to read its terms carefully. If the investor they suit, you don't have to do anything.

In the absence of automatic prolongation or if its conditions do not suit the depositor, will have to do a number of actions.

Listed below step by step instructions, з допомогою якої пролонгація депозиту не викличе ніяких складнощів у вкладника.

Step 1. Study of the contract

Even when making a deposit, you should carefully study the contract for the terms of the extension. It is useful to do this again as the deadline approaches, to remember all the nuances.

It is important to remember, that most often at prolongation the rate changes on that, which is valid in the bank at the end of the deposit. Therefore, it is useful to study market proposals, to make sure, that the credit institution still offers favorable interest rates.

Don't forget, that after the continuation of the termination of the contract before the end of the new term threatens the loss of income from the moment of renegotiation.

In this regard importantly carefully analyze the financial situation. If funds may be required before the expiration of the deposit after the extension, it makes sense to enter into another contract for a shorter period.

Step 2. Visiting the bank's office

You will have to visit the branch of the credit institution Two cases:

  1. if the terms of the deposit do not provide for prolongation;
  2. if the conditions for extending the term of the depositor do not suit.

In the office you should contact a bank employee, for a detailed consultation.

Step 3. Advice

Going for a consultation, the investor must have a clear idea of ​​this, what to learn from the employee.

It is necessary to find out during the consultation:

  • there is an automatic prolongation and what are its conditions for the current contribution;
  • there are appropriate alternative conditions for investing, if so, what are their conditions.

During the consultation it is important to ask, to have the employee talk about possible investment options. You can also find out on our website, where to invest money, to receive monthly income.

in addition, will be useful, if the consultant demonstrates estimates of estimated income for all relevant schemes.

Step 4. Coordination of investment conditions

After, how all possible schemes will be painted, you can choose the best way to extend the term of the deposit.

There are 2 options for action:

Version 1. The client decides to extend the deposit automatically. У цьому випадку необхідно попросити роздрукувати договір на новий строк.

Version 2. It was decided to make a contribution on other terms. Тут важливо ретельно уточнити абсолютно всі нюанси. After that, the old man will have to terminate the contract, transfer funds to a new account and sign an updated agreement.

Step 5. Confirmation of intention to extend the deposit

If the depositor decides to extend the current deposit, in case of visiting the office will have to confirm this intention. To do this, you need to write statement.

You can do this directly in the office. A new contract will be published later, which will have to get acquainted, then sign.

So, there is nothing complicated in prolonging the deposit. To avoid problems, enough carefully study the presented instructions and strictly follow it.

6. In which banks you can make deposits with capitalization, replenishment and prolongation - a review of the TOP-3 large banks

The Russian financial market has a large number of banks, which offer deposits with capitalization, replenishment, as well as prolongation.

Below are presented Three credit institutions, in which there are profitable deposits. They have programs with all the parameters considered, but before opening a deposit in any case you should contact the bank for a detailed consultation. Only the office will be able to tell in detail about all the programs, currently operating in the credit institution.

1) Sberbank of Russia

For many years, millions of Russian citizens have trusted their money Savings Bank. This credit institution is the oldest in our country.

Today, among the deposits with automatic prolongation is the most popular deposit Good year. On it in bank offer the rate from 7,4 to Eight% annual. The final value is determined depending on the amount, deposited.

The minimum term for this contribution is Three month. The amount begins from 100 000 rubles. Interest is accrued at the end of the contract. You can open a deposit, not just by contacting the office, but also on the bank's website online.

2) Ural Bank for Reconstruction and Development

For 27 years, that have passed since its foundation UBRD, the bank was able to enter 30 largest credit institutions in Russia.

The Ural Bank is trusted by the state, here it is allowed to open accounts for utility companies, strategic enterprises, as well as to maintain pension savings.

The bank's branches are located in 43 Russian regions, in them you can open a deposit with a bet to 11% annual. When making a deposit on the bank's website you can get more One%.

3) VTB

VTB Bank is part of an international group, operating in the financial market. Today in the offices, located in 72 Russian regions, you can open deposits with a rate 5,75— 7,85% annual.

To compare the terms of different bank deposits and choose the best one, it is not necessary to go to a bank branch. Just call the hotline. There is another option - to visit VTB website.

If not all issues are resolved, can be ordered directly on the Internet resource callback. To do this, just fill out a special form.

Often depositors are skeptical, which bank to prefer. Experts advise to use a special questionnaire, which will help make decisions.

Questionnaire for comparative assessment of credit institutions by different characteristics:

Characteristic Answer options with points
Validity in the financial market Since Soviet times - 10 points

More 10 years - 5 points

5-10 years - 3 bali

Less 5 years - 0 points
Insured deposits So - 10 points

No - 5 points
The size of the credit institution In the Russian ranking is one of the top ten - 10 points

Not in the top ten in Russia, but one of the largest in the city - 5 points
Having an office within walking distance from home or work IS - 5 points

No - 0 points

According to this questionnaire, all selected banks should be evaluated. After that, preference should be given to those of them, who will score the most points.

We also advise you to read our article about it, in which bank it is better to open a deposit at a high interest rate.

7. How not to make mistakes, opening a deposit with interest capitalization - 3 the most important expert councils

To make a deposit with the maximum income, you should read the advice from experts. They will help you avoid most mistakes.

Advice 1. It is worth investing only in reliable banks

Most depositors chase the maximum percentage and are not always right.

It is worth considering! It is much more important to pay attention to the reliability of the bank, than the interest on the deposit.

Of course, deposit insurance system, which is mandatory in Russia today, guarantees a refund in the event of a bank failure. However accrual of interest from the moment of revocation of the credit institution's license is terminated.

It turns out, that the investor will lose income, after all, the payment of the sum insured is not made immediately.

Advice 2. Be sure to calculate the effective bid yourself

Many investors, as you know, bribe for attractive advertising, which promises huge interest on the deposit. But do not rush.

The ideal option is to calculate the income before visiting the bank branch, which will be received when depositing funds on these terms. You can do this on the basis formulas, given in this article, or using special online calculators.

This approach allows you to know when contacting the bank, what to expect. in addition, it will be possible to compare own result with that, which leads a bank specialist.

Advice 3. Do not forget to assess your own financial situation

Making decisions, what amount and for how long to open a deposit, the investor must carefully assess their own financial situation.

It is important to understand, that most deposits do not involve expenditure transactions. In this case, early termination leads to the absence of interest. Therefore, it is important to choose the term with maximum responsibility.

After listening to these tips, every novice depositor will be able to easily open a profitable deposit.

8. FAQ - frequently asked questions and answers

Traditionally, at the end of the publication we will answer the questions, which most often occur in depositors.

Question 1. Where to find an online calculator to calculate the parameters of deposits with capitalization and replenishment?

Depending on that, why calculations are made, there are several options for calculators, which are used to calculate contributions.

Example of an online deposit calculator with capitalization and replenishment

Types of online calculators for calculating deposit parameters:

  1. Calculators on banks' websites, offering to open a deposit. You can find them on the deposit selection page. When calculating such a calculator will have to enter a minimum of data - the amount, term of the deposit, date of registration, as well as planned replenishments (if provided). The rate and other parameters of the deposit are made automatically.
  2. Calculators, located on thematic (financial) sites. Даний варіант підходить тим вкладникам, who have not yet decided which bank to carry their funds. Here you can find useful information about deposits, offered by various credit institutions. Using such calculators, the depositor must enter quite a lot of parameters, after all, the characteristics of deposits in each bank are different. It is necessary, in particular, indicate the availability of capitalization and its periodicity.
  3. Calculator sites. Recently, the popularity of specialized Internet resources is growing, which are deposit calculators with the maximum set of useful functions. In addition to the characteristics, used in other calculators, are used here: choosing the type of bet (fixed or floating); possibility of replenishment and withdrawal; tax accounting. in addition, here is a detailed description of all the functions used. This approach leads to that, that the calculation is as accurate and detailed.

Choosing a calculator, should be understood, that in any program for calculations may occur errors. They are significantly different for each type of calculator and can occur for different reasons.

The main reasons for errors in calculations when using an online calculator:

  • the simplest programs do not take into account many parameters - income taxation, commissions and others;
  • some calculators do not allow you to predict a change in income in the case of additional contributions or withdrawal of part of the deposit amount;
  • banks have different attitudes to accruing interest, if the expiration date falls on the day off.

All the above circumstances lead to errors. It should be borne in mind, that for the simplest programs it can be quite large.

Take note! The use of professional calculators in the calculations minimizes errors. They usually do not exceed one percent.

Question 2. Whether the depositor has the right to refuse to extend the deposit and what should be done to do so?

Naturally, the depositor has the full right to refuse further relations with the bank, in which his deposit ended.

However, not everyone knows, what actions should be taken, so that there are no problems with obtaining funds, and interest was not lost. Therefore, below we provide detailed step-by-step instructions.

Step 1. Visiting the bank's office

If the terms of the contract provide automatic prolongation of the deposit, but the depositor decided to withdraw his money from the bank, will have to go to the bank. At first it is enough to consult, why contact the office, call the hotline or talk to a consultant on the site.

Most often, to refuse to extend the deposit, have to contact the branch of the credit institution. But the exact need for this can be confirmed only by employees of a particular bank.

Step 2. Making an application

In the branch of the credit institution, probably, will have to fill written statement. The sample of this document is different in each bank, so it makes no sense to draw it up in advance.

Step 3. Termination of the deposit agreement

On the basis of a written statement of the deposit agreement regardless, it was prolonged, will be broken.

It is important to know! A statement is required, to confirm the depositor's intention to withdraw their own funds.

Step 4. Getting money

It remains in the last step only withdraw funds. You can get them in cash or by transfer to another account, details of which are indicated in the application.

9. Conclusion + video on the topic

So, capitalization increases the level of profitability of the deposit. Prolongation of the contract is also a useful parameter. It is important not only to know, what these concepts mean, but also to understand, what are their features.

Having studied the tips and instructions given in the article, everyone will be able to choose the most profitable contribution in accordance with their preferences.

We advise you to also watch a video about it, what is compound interest (% subject to reinvestment or capitalization) and how to calculate them: