How to calculate interest rate factor?

To calculate an interest rate factor, use the following formula: Interest Factor = (1 + Interest Rate)^Number of Periods. The interest rate should be expressed as a decimal (for example, 0.05 for 5%) and the number of periods should be in the same unit as the interest rate (for example, monthly if the interest rate is expressed as a monthly rate). For example, if the interest rate is 5% per year and the number of periods is 12 (for one year), the interest factor would be (1 + 0.05)^12 = 1.63.

The effects of interest rates are often not directly felt but play out over a long time as valuations of real-estate and other assets adjust.

At Horizon65, we created a mobile app that enabled you to check the effect of high interest rates on your savings and to simulate potential investments that can defend against it.

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