How this calculator works
Equivalent rates produce the same one-year growth factor despite different compounding schedules. The calculator first finds that factor, then recovers the nominal quote at the new frequency. Continuous compounding uses an annual logarithmic rate. Both sides assume interest remains invested with no fees or rate changes.
Formula
(1+j1/m1)^m1 = (1+j2/m2)^m2; j2 = m2[(1+j1/m1)^(m1/m2) - 1]. AER is the shared annual growth factor minus one.
Worked example
12% nominal compounded monthly is equivalent to 12.304030% nominal compounded semi-annually. A 10% annually compounded rate is equivalent to 9.761770% nominal compounded semi-annually.
Advertisement
Frequently asked questions
Is the new nominal rate always lower?
Increasing compounding frequency lowers a positive nominal quote for the same effective yield. Decreasing frequency raises it.
Can I compare continuous compounding?
Yes. The continuous annual quote is the natural logarithm of the shared annual growth factor.
Does a rate conversion change the investment outcome?
Equivalent quotes preserve the modelled annual outcome; different fees or cash-flow terms can still change actual balances.