Learn • Cash Flow Bonds
How Daily Compounding Works
When interest stays invested, it can earn interest of its own. Small additions can build on each other over time.
Compounding means earning interest on your investment and on interest that has already accrued.
A little more to build on
With daily compounding, the calculation happens each day. Interest added today becomes part of the balance used for the next calculation. The longer that money remains invested, the longer this process can continue.
Daily compounding describes how interest accrues. It does not promise daily cash payments or eliminate the risk that an issuer cannot pay.
Interest rate and APY are different
An annual interest rate tells you the stated rate used to calculate interest. Annual percentage yield, or APY, expresses a year’s growth including compounding under the stated assumptions.
For example, a hypothetical investment with a 5% APY would turn $100 into $105 over one year before fees and taxes, assuming no additions, withdrawals or missed payments. You would not add an extra compounding bonus on top of that 5%.
What changes your result?
Your starting amount, time invested, additions, withdrawals, fees, taxes and whether the issuer meets its obligations all matter. A calculator illustrates assumptions; it cannot predict or guarantee your actual outcome.
Cash Flow Bonds use 7.0% annual interest, compounded daily on a 365-day basis. The calculator illustrates the selected invested period and any end-of-period additions, not the time a redemption request might take to process. Under the filed bond form, interest is calculated up to, but not including, the day the company receives the holder’s redemption notice. Interest stops on that receipt date; the processing period does not add further interest.
Sources and further reading
Your next chapter starts small
Make room for what matters.
Open to everyday investors. Start with just $10*.
I like looking beyond the balance. Your investment helps fund real estate and small businesses in our communities.
Learn • Cash Flow Bonds
How Daily Compounding Works
When interest stays invested, it can earn interest of its own. Small additions can build on each other over time.
Compounding means earning interest on your investment and on interest that has already accrued.
A little more to build on
With daily compounding, the calculation happens each day. Interest added today becomes part of the balance used for the next calculation. The longer that money remains invested, the longer this process can continue.
Daily compounding describes how interest accrues. It does not promise daily cash payments or eliminate the risk that an issuer cannot pay.
Interest rate and APY are different
An annual interest rate tells you the stated rate used to calculate interest. Annual percentage yield, or APY, expresses a year’s growth including compounding under the stated assumptions.
For example, a hypothetical investment with a 5% APY would turn $100 into $105 over one year before fees and taxes, assuming no additions, withdrawals or missed payments. You would not add an extra compounding bonus on top of that 5%.
What changes your result?
Your starting amount, time invested, additions, withdrawals, fees, taxes and whether the issuer meets its obligations all matter. A calculator illustrates assumptions; it cannot predict or guarantee your actual outcome.
Cash Flow Bonds use 7.0% annual interest, compounded daily on a 365-day basis. The calculator illustrates the selected invested period and any end-of-period additions, not the time a redemption request might take to process. Under the filed bond form, interest is calculated up to, but not including, the day the company receives the holder’s redemption notice. Interest stops on that receipt date; the processing period does not add further interest.
Sources and further reading
Your next chapter starts small
Make room for what matters.
Open to everyday investors. Start with just $10*.
I like looking beyond the balance. Your investment helps fund real estate and small businesses in our communities.