this post was submitted on 11 Aug 2023
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for a savings account that calculates interest daily and pays interest monthly, is it better to contribute daily or monthly? (lemmy.world)
submitted 1 year ago* (last edited 1 year ago) by Agent641@lemmy.world to c/personalfinance@lemmy.ml
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So i got into a disagreement with ChatGPT about whether you earn more interest overall if you contribute daily rather than monthly, if the overall contribution over 1 year is the same.

I made CGPT write some python code to prove it. His code is on the left. I still didnt believe him so I wrote my own, on the right.

Our results seem to disagree, so Im asking you guys, if your interest is calculated daily and paid monthly, is it better to contribute $143 per day for 365 days, or $4349.58 monthly for 12 months?

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[โ€“] evujumenuk@lemmy.world 1 points 1 year ago* (last edited 1 year ago)

Without starting to calculate, or looking at the code, I'd say it's obvious that an investment strategy where all of a month's contributions are made on the first day of the month will be superior to one where you spread them out. Also, an investment strategy of making the month's contributions on the last day will be inferior to spreading them.

So it'd really depend on how you time your monthly investments. If you can invest as soon as you get your monthly income, that's probably the most beneficial way to do it.

edit โ€” Taking a quick look at your code, that's exactly what's happening. In each period, ChatGPT invests first, then lets interest accrue, whereas you let interest accrue, then invest.