- Jessie Jimenez
APY or Annual Percentage Yield is the amount of interest an investment will earn in one year, including compounding.
The compounding really makes a difference.
If r = the simple interest rate and n = the number of times it compounds during the year then... APY = 1 + r/n all to the power of n, then - 1
This will get the the actual interest you will earn, including the compounding!