Occasionally a customer asks whether making half monthly payments instead of monthly payments will pay off their mortgage quicker. The answer is no. Let’s assume a 30-year loan. You will only save part of one month’s interest over the 30 years so it is probably not worth it and this is assuming that your bank will process your partial half month payments timely.
Often, we have no activity on a loan or an investment but we want to know the amount of interest that is accruing or compounding. You can trigger the interest to appear by adding events such as a Payment or Invest for a $0 amount. This causes TValue to calculate the interest and, depending on the compute method, either add it to the principal if you are using Normal (compound interest) or to the accrued interest balance if you are using US Rule (simple interest).
In reviewing the 2017 Berkshire Performance summary, you would be amazed at the impact that compounding has over a number of years. In their report, they show three return calculations: the Berkshire per share “book value” which was a 19.1% compounded annual return, the Berkshire per share “market value” which was a 20.9% compounded annual return, and the S&P 500 compounded annual return of 9.9%. These were from August 31, 1964 to December 31, 2017.
Have you ever had a detailed Excel schedule that you would like to copy into TValue? With TValue 6, pasting cells from Excel into the TValue cash flow lines is easy. The key is to have the Excel schedule in the same format as TValue. What this means is the cells on a column in Excel need to match the order of fields on a TValue cash flow line. This order is Event | Date | Amount | Number | Period | End Date | Memo. At a minimum, which is what most people need, the first column in Excel should contain the Event name, the second column should contain the Date, and the third column should contain the Amount. Then you can copy those cells from Excel, go to TValue 6, put the mouse on the first cell you want to paste, and click on the Paste icon on the left-hand side. When a Rate Change event, Loan Details, and/or Special Series is added, additional columns may be needed.