Interest is calculated on a daily basis. The formula for calculating interest is as follows:
Invested amount * Amount of days * Interest rate / 360
If part of the invested capital is returned during the period of your investment, this has to be considered when calculating interest. This can be illustrated with the following example:
- You invest €1000 in a set of Notes with an interest rate of 10% for a period of 2 months, and the set of Notes has 10 underlying loans where total investment has been distributed as 100 EUR per underlying loan:
- For the first scheduled payment at 30 days, the calculation is as follows:
100 EUR * 30 days * 10% / 360 = 0.83333333333 EUR interest (first payment).
- If half of the invested capital is returned after 30 days, the calculation for the second month is based on the remaining outstanding investment of 50 EUR:
50 EUR * 30 days * 10% / 360 = 0.41666666666 EUR interest (second payment).
- In this scenario, the remaining 50 EUR are returned, and you have made a profit of 1.24999999999 EUR by investing 100 EUR over a period of 2 months.
The same calculation would be executed in each one of the underlying loans according to their payment schedule.