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Interest Rates

Interest is the cost of using someone else’s money or the return you get from letting someone else use your money.  The interest rate will vary depending on the risk involved as well as the inflation rate.

The interest rates and returns to savings have varied over time. In the last decade, interest rates have been some of the lowest in history.  Recently a 4 year auto loan would vary from 3.5% with a credit score above 760 and could be as high as 20% with a low credit score.

Below are average returns for investing in stocks and bonds.  If saving at a lending institution with a CD or savings account the rate of return may be less than 1%.

Annual Returns on Investments in

Arithmetic Average

S&P 500

3-month T.Bill

10-year T. Bond

1928-2014

11.53%

3.53%

5.28%

1965-2014

11.23%

5.04%

7.11%

2005-2014

9.37%

1.44%

5.31%

Source:  http://www.stern.nyu.edu/~adamodar/New_Home_Page/data.html

Current interest rates and savings rates.

http://www.myfico.com/myfico/creditcentral/loanrates.aspx (Loan Interest Rate calculator with Credit Scores)

Historical Returns to Investing.

Aswath Damodaran from New York Univesity has compiled a spreadsheet of historical returns to investing.  His homepage and data website are below.

http://www.damodaran.com

http://www.stern.nyu.edu/~adamodar/New_Home_Page/data.html

Utah State University Extension Risk Management Agency
Diversified Agriculture Consortium