The calculation of the average monthly balance is by adding the balances of each month and then dividing by the number of days in that month. Specifically, it can be done by following these steps:
Step 1: Determine the end of the month date
The first thing you need to do is determine which day the last business day of the month is, usually the last day of the month. For example, if there are 30 days in the month, then the last working day is the 29th day (i.e., the 28th).
Step 2: Record the amount for each trading day
In the last few days of each month, there are a lot of inflows and outflows that take place. Therefore, it is necessary to keep a detailed record of the incoming and outgoing of each fund in the last few days of each month. For each transaction, you need to indicate the date of the transaction, the name of the account, the type of transaction (e.g. deposit, withdrawal, transfer, etc.), and the amount of the transaction. This information can be done through electronic** or other financial software provided by the bank.
Step 3: Count the total amount of each month
Based on the month-end date determined in the first step, add up the amounts of all trading days to get the total amount of funds for each month. This total amount is the average monthly balance.
Step 4: Calculate the average daily balance
Divide the total amount for each month by the number of calendar days in that month to get the average daily balance. For example, if there are 30 trading days in a month, the average daily balance is: (30 x daily balance) 30 = 10 RMB.
Step 5: Calculate the annualized rate of return
Multiply your average daily balance by the number of days in a year to get your total gain for a year. This total return is then divided by the principal amount to get the annualized rate of return.
Through the above five steps, you can accurately calculate a person's average monthly balance. It is important to note that the average monthly balance is only a rough indicator and does not fully reflect a person's actual level of wealth. In addition, it is also necessary to consider the impact of factors such as inflation to assess the asset status of the individual more comprehensively.