Forum Discussion

Andrés González Reynoso's avatar
Andrés González Reynoso
Copper Contributor
Jun 07, 2018

Use RATE to calculate rate of return on my savings?

Hello,

 

I am trying to use the RATE function to calculate the rate of return on my savings but I keep getting an error. I am saving $100 every month and have been doing so for 14 months. I have currently $1,450 in my account. I am entering the parameters as follows:
NPER= 14 (14 months I've had my money invested)

Pmt= 100 (I save $100 every month)

PV= 0 (this is where I am doubting. $0 was the starting value in my account. I am trying to do it as if I were at the beginning of period 1)

FV= 1450 (again, I am using the assumption that I have $0 at the beginning and want to have $1450 in the end)

Type= 1 (I am making them at the beginning).

 

I know there is something flawed in my formula but I can't figure out what. My best guess is the PV and FV but I don't know what else I could enter; if 1450 is my PV then what would be my FV? Any help would be greatly appreciated.

Formulas & Functions
Need Help
  • Russell Proctor's avatar
    Russell Proctor
    Brass Contributor
    Jun 13, 2018
    Hi,
    The #NUM! error message you are seeing is because the PMT argument is not negative.
     
    It is important to remember that the signs (plus or minus) are very significant:
    A negative number represents any cash you pay out (for example a deposit).
    A positive number represents any cash you receive, start with or end with.
     
    Adding a minus sign before the PMT value will give you the monthly interest rate.
    Multiplying this by 12 will give you the annual interest rate.
     
    =RATE(14,-100,0,1450,1)*12 

    The monthly breakdown can be seen here

     

    Hope this helps

    Russell

Resources