GGplot - Compound Interest With Data Science And R

This video takes what we covered in the previous video and delves into compound interest and why its so important. In this video we will cover all of the code required in R to calculate the compounded interest for a fixed value ($1,000) invested over a period of 15 years at 4 different interest rates:

1) 0.06% - the current national bank account average payout.
2) 5%
3) 10% - the yearly average rate of return over 15 years for the S&P 500 taking the Coronavirus (Covid-19) into account.
4) 15%

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These 4 interest rates will show you the importance for placing your monies in a better, more diversified investment vehicle (like the SPY ETF that follows the S&P 500 index closely) rather than leaving your money in a bank where they make all the money off your money exponentially and you basically get nothing and lose value over time.

We will walk through the whole process from creating variables and calculating the compounded values for each year. We will convert them to a dataframe and then do some manipulating and then graph this in a basic ggplot2 line graph. We will end up with an advanced 4 part line graph (one line for each of the above 4 interest rates) that any executive would be proud of. This will cover all of the code for both the base and the advanced ggplot line graphs.

This was a fun and quick process and blends math and finance with data science and coding. It also shows that data science can be fun, interesting and educational.

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