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Barakach
Posted - 2011.08.10 19:00:00 - [1]
 

Savings account idea

First off, this is an idea I have, but I do not feel confidant in my current state of aquiring a few more skills, and grinding a bit more standing for better broker fees. I do think I would like to do something like this in the near future, but I would like from critical feed-back.

I was tossing around an idea of an account, instead of a monthly loan/etc, One could "deposit" isk, leave money in however long, and later withdrawl. The way I would handle this is by having an "exchange" rate.

Example. Say I start with an exchange rate of 1/isk:1/mine You could deposit 100 isk and I would give 100 mine. At some interval, I would apply my interest. Lets use 10% for ease of calculations. Instead of increasing how much isk someone has with me, I instead deflate the exchange rate. So 1.1/isk:1/mine. Lets say the first person wants to withdrawl 50 isk. 50isk is worth 45.454545454545454545454545454545/mine. So I give them 50 isk and subtract 45.454545454545454545454545454545 from their 100/mine, leaving them with 54.545454545454545454545454545455/mine. Same idea in reverse for deposits.

By modifying the exchange rate, It makes it easy to apply interest to all accounts while allowing someone to deposit/withdrawl whenever.

The exchange rate idea is just the foundation for how I currenly plan to implement. How I would calculate interest is where I really want to be critiqued for ideas. I wouldn't guarentee a given interest rate, but the customers would share in my profits, but not my losses. The way I would calculate gains is mark down my total sell+escrow+wallet. At the end of the week, I would note the growth and apply interest depnding on the growth.

I was thinking of a target interest rate of 5%/4-weeks, which is 1.4953487812212205419118989941409%/week compounded 4 times = 5%. The exchange rate would get 100% of any growth, up to ~1.49%, after that it would be split 50/50.

Example. Start of week, I have 1bil value, and at the end of the week, I'm worth 1.2bil. 20% growth. First ~1.49% is entirely applied to the exchange rate, the rest is split 50/50, so I get to share in on the profits a bit. 20%-1.45%=~18.5% * 1/2 = ~9.25% plus the 1.49% = ~10.75% interest for one week. I make money, the customer makes money.

Because interest is applied weekly, anyone depositing mid week wouldn't get interest applied as they didn't contribute the entire week. Possibly pro-rating them for partial week interst.. not sure as it's more work. I would just prefer telling the customer that they won't get interest applied and they can either hold on to their money until the begining of the week or just let me hold it but keep it liquid until the next week starts.

What I like about this is the customer gets to share in on extra profits, while not stunting my gains, at the same time, I'm not forced to pay out a certain amount no matter what. I wasn't planning to share losses as it allows me to periodically make personal purchases and not worry as much how it affects the growth of the accounts. Large purchases I would obviously exclude from the calcualtions, I just wouldn't want to micromanage lost of here-and-there purchases, like ammo for my drake or something.

I understand this idea is a bit more fuzzy and wouldn't fly in the real world, but my idea is more targetted towards a casual friendly style "savings" account where the customer knows that they'll be making money on their money and never lose any, even if it fluctuates a bit. Not really meant for short loans.

Another note is money sitting is money wasted when it comes to trading, so all withdraws would be subject to avalability and first come first serve for withdrawl requests. Also, everything is subject to rounding errors, but using something like Google Docs for a sheet, the precision is quite high, so it shouldn't matter much at all.

Vim Toe
Posted - 2011.08.10 19:09:00 - [2]
 

Or you could just invest with me at OCP Investment bank giving 4% paid 1st of every month and not have to read the **** you scribbled above

Barakach
Posted - 2011.08.10 19:20:00 - [3]
 

A personal note is I'm not one for speculation and I work in High sec where I trade on anything with semi-decent volume and a difference. I have my own calculations to plug in broker fees and sales tax so I can tell exactly where my break even on a buy/sell is. I quite regularly make 0.01isk on sales from time to time. I take note of of past averages/highs/lows and make my buy/sells accordinging. Stable/flat items I can price more aggressively, volitile items I work more passively.

Ideas, concerns? Remember, I'm targetting this to be easy to maintain long term while not turning it into a job.

Caliph Muhammed
Caldari
Caldari Naval Criminal Investigative Service
Posted - 2011.08.10 19:28:00 - [4]
 

Edited by: Caliph Muhammed on 10/08/2011 19:31:56
Originally by: Barakach
Stuff.


I would suggest when you are ready to start your idea in a serious sense that you consider your presentation a little more carefully and simplify your system.

It presents itself as overly complicated for the sake of being overly complicated.

Jerry Pepridge
Posted - 2011.08.10 22:38:00 - [5]
 

Originally by: Vim Toe
Or you could just invest with me at OCP Investment bank giving 4% paid 1st of every month and not have to read the **** you scribbled above


Where is your thread? did i pledge yet?

Barakach
Posted - 2011.08.11 01:24:00 - [6]
 

Edited by: Barakach on 11/08/2011 01:33:19
Originally by: Caliph Muhammed
Edited by: Caliph Muhammed on 10/08/2011 19:31:56
Originally by: Barakach
Stuff.


I would suggest when you are ready to start your idea in a serious sense that you consider your presentation a little more carefully and simplify your system.

It presents itself as overly complicated for the sake of being overly complicated.


It's actually very simple, but I am horrible at conveying my ideas. I would never be a good teacher.

Nutshell: Uses an exchange rate to simplify someone withdrawing/depositing whenever they want which allows someone to drop money into you, forget about it for a while, and ask for some/all back when they need it, all the while it's making them more money.

The complexity comes from my idea of a variable rate doesn't have to be implemented, but I find I typically make more on the line of 20% per week, but not always. 20% per week is about 100% per month, a 10% return is crap. My way allows others to share in on more of the pofits while not holding me down to having to give a certain value no matter what. Could have a bad month, Real life does exist. But anyone in for the long haul would make much more.

To simplify it, I could just say 5%/month or 1/2 of the growth, whichever is greater. Being very confidant of at least 10% growth/month, it guess it would just be much simpler to word it this way.

I doubt my 20%/week returns will continue as I will eventually start to hit a saturation point, but I'm only playing around with ~1.5bil, so it's just a drop in the bucket.

If you ignore having to actually buy stuff, I turned 20mil into ~500mil in 6 weeks. Started off with nothing more than 2mil skill points and 20mil from mining in my retriever. Stopped mining, bought a Badger Mark II, and started hauling. That's about 800%/month. Would've been a good time for someone to spot me a few mil.

Ok.. so here's about what I would say if I was presenting.

Currently accepting investments of at least 10mil isk for 5%/month or 50% of growth(eg 20% growth would give 10% interest), which ever is greater. Deposits and Withdrawls at anytime, interest is applied Saturday night, but only to money that was deposited before last Sunday. No more deposits accepted once the total value of all current deposits reaches 50% of my wallet+escrow+sell.

or something like that


But thanks for the suggestion about it being too complex. As you can see, I stripped out a bunch of extra crap.

P.S. No one think I'm opening to the public. I'm still stabilizing myself as I experiment.. I am new to the game.

Jiska Ensa
Posted - 2011.08.11 01:31:00 - [7]
 

Correct me if I'm wrong, but hasn't every "bank" in eve turned out to be a scam, or turned into a scam, or otherwise resulted in people losing enourmous amounts of isk?

"You can take my word for it" doesn't go far these days.

Block Ukx
Forge Laboratories
Posted - 2011.08.11 01:34:00 - [8]
 

Originally by: Jiska Ensa
Correct me if I'm wrong, but hasn't every "bank" in eve turned out to be a scam,....


No



Barakach
Posted - 2011.08.11 01:45:00 - [9]
 

Originally by: Jiska Ensa
Correct me if I'm wrong, but hasn't every "bank" in eve turned out to be a scam, or turned into a scam, or otherwise resulted in people losing enourmous amounts of isk?

"You can take my word for it" doesn't go far these days.


That's why I'm primarily targetting my corp, who is mostly full of people who run missions and have money on the side. I want to let their money make money for them, while letting me enjoy playing in the market.

If I open to the public, I won't beholding my breath. But yes, trust is the biggest thing and Eve is full of scams.

Akita T
Caldari Navy Volunteer Task Force
Posted - 2011.08.11 01:48:00 - [10]
 

Originally by: Barakach
Nutshell: Uses an exchange rate to simplify someone withdrawing/depositing whenever they want which allows someone to drop money into you, forget about it for a while, and ask for some/all back when they need it, all the while it's making them more money.

Using a variable exchange rate is not really a simplification for the customer, it's a complication.
Besides, people are quite familiar with the concept of "gaining interest" and are not bothered by the fairly obvious and quite frankly straightforward way interest is computed.
Maybe you could instead sell shares and distribute dividends ? Just make sure over 50% of the shares are always in your own wallet.

Claire Voyant
Posted - 2011.08.11 02:33:00 - [11]
 

Edited by: Claire Voyant on 11/08/2011 02:44:30
You really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, need to reduce the number of decimal places you are using.

Actually, there is one obvious reason why banks do it the way they do. A customer with hundreds of millions of dollars in his accounts has his interest rounded to the nearest penny. A customer with a few hundred bucks has his interest rounded to the nearest penny. The guy who needs 10 decimal places of accuracy and the guy who only needs 5 decimal places both get what they need. In eve it may be worse because you can theoretically have accounts in the hundred of billions. The little guy is wondering why you have everything out to 15 decimal places when his calculator can only handle 10 and the big guy is wondering why he needs to multiply two really big numbers to find out his balance. In other words, don't be lazy or at least find another way to be lazy.

Florestan Bronstein
24th Imperial Crusade
Posted - 2011.08.11 08:14:00 - [12]
 

Edited by: Florestan Bronstein on 11/08/2011 08:25:56
Originally by: Claire Voyant
Edited by: Claire Voyant on 11/08/2011 02:44:30
You really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, need to reduce the number of decimal places you are using.

no problem! he will just double/long double instead of float LaughingLaughingLaughing

(yes, i am being sarcastic

e.g. 0.01 decimal converts to the single-precision float 0 01111000 01000111101011100001010 which converts back to decimal 0.099999998

now think about compounding interest and oops you may realize that using numbers for financial purposes actually requires you to think about how these numbers are going to be stored...

quoth Wikipedia "It may come as a surprise that terminating decimal fractions can have repeating expansions in binary."

it's repeating binary representations that are your problem, not repeating decimal representations (as Claire seems to suggest)

... or try to subtract two similarly sized numbers from each other using floating point representation and see what happens [left as exercise to the dear reader])

IceFyre S18
Zulu Labs
Zulu People
Posted - 2011.08.11 08:18:00 - [13]
 

Sorry jumping this just to note, if you want custom accuracy make use of DECIMAL type in db.
Or better, make your own engine where you use 2 integer part numbers, one for left one for right from dec point.

Claire Voyant
Posted - 2011.08.11 10:37:00 - [14]
 

Originally by: Florestan Bronstein
Edited by: Florestan Bronstein on 11/08/2011 08:25:56
Originally by: Claire Voyant
Edited by: Claire Voyant on 11/08/2011 02:44:30
You really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, need to reduce the number of decimal places you are using.

it's repeating binary representations that are your problem, not repeating decimal representations (as Claire seems to suggest)

You missed my point. I think floating point calculations will probably work just fine for what he wants to do, if he puts a little thought into it. It's communicating those numbers to the customer (or potential customer) that is the problem. No one wants to deal with 30 decimal place numbers (unless those numbers are on the left side of the decimal point.)

Banks round interest payments all the time and as long as they round properly and do it before they add the interest to the balance there is no problem.

Barakach
Posted - 2011.08.11 12:23:00 - [15]
 

Originally by: Claire Voyant
Originally by: Florestan Bronstein
Edited by: Florestan Bronstein on 11/08/2011 08:25:56
Originally by: Claire Voyant
Edited by: Claire Voyant on 11/08/2011 02:44:30
You really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, need to reduce the number of decimal places you are using.

it's repeating binary representations that are your problem, not repeating decimal representations (as Claire seems to suggest)

You missed my point. I think floating point calculations will probably work just fine for what he wants to do, if he puts a little thought into it. It's communicating those numbers to the customer (or potential customer) that is the problem. No one wants to deal with 30 decimal place numbers (unless those numbers are on the left side of the decimal point.)

Banks round interest payments all the time and as long as they round properly and do it before they add the interest to the balance there is no problem.


Google Docs internally calculates to the 14th decimal as a decimal number, it doesn't use floats/doubles, just like any decent spreadsheet. Adding in extra steps to round is just that, extra steps and more work. I would rather keep the precision on the calculations and only round at the end for display reasons. No, the customer doesn't need anything past the hundreth, but I also don't want rounding errors to add up over time and screw someone.

Claire Voyant
Posted - 2011.08.11 13:27:00 - [16]
 

Originally by: Barakach
Google Docs internally calculates to the 14th decimal as a decimal number, it doesn't use floats/doubles, just like any decent spreadsheet.

Of course, Google Docs uses magic.
Originally by: Barakach
Adding in extra steps to round is just that, extra steps and more work.

Spreadsheets have these things they call formulas. Look them up.
Originally by: Barakach
I would rather keep the precision on the calculations and only round at the end for display reasons.

If that's what you want to do, you might want to look into using formatting instead of rounding.
Originally by: Barakach
No, the customer doesn't need anything past the hundreth, but I also don't want rounding errors to add up over time and screw someone.

Yes, but rounding errors are not caused by the rounding function, they are caused by the rounding inherent in the calculations. If you promise to pay interest monthly or weekly rounded to the nearest 0.01 isk that is not an error. If the customer can duplicate your calculations and come up with the same result, there is no error. If the customer consistently gets different results that is a perceived error and it doesn't really matter whether you are right or he is.

Barakach
Posted - 2011.08.15 23:16:00 - [17]
 

Edited by: Barakach on 15/08/2011 23:16:55
Originally by: Claire Voyant
Of course, Google Docs uses magic.


All good spread sheets use "numerical" computation, not binary. Makes them slower in that sense, but hundrends of nanoseconds instead of nanoseconds isn't much an issue for me.

Originally by: Claire Voyant
Spreadsheets have these things they call formulas. Look them up.


Yes, but adding more steps to the formulea doesn't make them simpler. When I do reports at work, I always do max accuracy, then format at the end.

Originally by: Claire Voyant
If that's what you want to do, you might want to look into using formatting instead of rounding.


Formatting is a display issue. Being that I solve this issue using rounding just means rounding is formatting.

Originally by: Claire Voyant
Yes, but rounding errors are not caused by the rounding function, they are caused by the rounding inherent in the calculations. If you promise to pay interest monthly or weekly rounded to the nearest 0.01 isk that is not an error. If the customer can duplicate your calculations and come up with the same result, there is no error. If the customer consistently gets different results that is a perceived error and it doesn't really matter whether you are right or he is.


Completely agree. I actually didn't think of this, the customer should be able to reproduce the results. I'll probably make a blank read-only version of my spreadsheet and make it public, just so people can see the logic.

I like that deffinition of "rounding error". For me, anything less than perfect is an error, but for the end user, anything that is reproducable and does what said to do is working perfectly.


 

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