Interest (Transaction)
An interest transaction records interest income received from bonds, savings accounts, P2P loans, or other fixed-income instruments. It represents the portfolio-level impact of an interest event.
🔑 Key Properties
| Property | Detail |
|---|---|
| Code | INTEREST |
| Cash effect | ⬆️ Increases balance |
| Asset effect | — (principal unchanged) |
| Tax event | Yes (taxable income) |
📊 Interest Sources
| Source | Description | Frequency |
|---|---|---|
| Bond coupons | Fixed or floating rate payments | Semi-annual / Annual |
| Savings interest | Interest on cash deposits | Monthly / Quarterly |
| P2P loan payments | Interest portion of loan repayments | Monthly |
| Crowdfunding returns | Fixed-rate returns on projects | Varies |
📐 Simple vs Compound Interest
📏 Simple Interest
Interest calculated only on the original principal:
\[
I = P \times r \times t
\]
📈 Compound Interest
Interest calculated on principal + accumulated interest:
\[
A = P \times (1 + r)^t
\]
The difference between simple and compound interest is the foundation of the Linear vs Compound Growth benchmark comparison.
🔗 Related
- 📈 Interest Events — Accrual and coupon mechanics
- 🏛️ Bonds — The primary interest-bearing asset
- 📅 Day Count Conventions — How interest periods are calculated