Comments on: ROI of insurance

By: KCLau

KCLau — Fri, 13 Mar 2009 01:18:56 +0000

@ Jeff,

You will need a financial calculator to get the EAR.
There are some online calculator of Time Value of Money (TVM) that are able to calculate the EAR too.

Here is an article about calculating EAR:
http://kclau.com/wealth-management/tvm-compute-effective-annual-rate/

By: Jeff

Jeff — Wed, 11 Mar 2009 16:19:33 +0000

Hi KC,

How do we find the state annual interest rate for the example above in order to calculate and get EAR?

By: KCLau

KCLau — Sat, 26 Jul 2008 03:29:08 +0000

ROI is the total return of investment. In this case, in the period of 2 years, the total return is 20%.

EAR is different – it is the effective annual return. This is the real return calculated every year.

Example – you put RM1000 in FD for 4% a year. After 2 years, you get RM1081.60.
The ROI is 8.16%. But the EAR is 4%.

By: Alvin

Alvin — Fri, 25 Jul 2008 12:04:04 +0000

Hi, how 2 calculate the EAR?
Why ROI is 20%, EAR is 9.54%?

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