APY

The annual percentage yield (APY) is the real rate of return earned on an investment, taking into account the effect of compounding interest. Unlike simple interest, compounding interest is calculated periodically and the amount is immediately added to the balance

• APY is the actual rate of return that will be earned in one year if the interest is compounded.

• Compound interest is added periodically to the total invested, increasing the balance. That means each interest payment will be larger, based on the higher balance.

• The more often interest is compounded, the higher the rate will be.