Discover the magic of compound interest. See how your money can grow exponentially over time.
Compound interest is interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods. It can be thought of as "interest on interest," and will make a sum grow at a faster rate than simple interest.
A = P(1 + r/n)nt
Where:
A = Future Value
P = Principal Investment
r = Annual Interest Rate (decimal)
n = Number of times interest is compounded per year
t = Number of years
Time is the most powerful factor in compounding. The earlier you start, the more time your money has to grow.
More frequent compounding (e.g., monthly vs annually) results in higher returns over time.
