Compound Interest
Compound interest calculator.
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🧮 Compound Interest Formula
A = P × (1 + r/n)^(n×t)
Where: A = Final amount, P = Principal, r = Annual interest rate (decimal), n = Compounding frequency per year, t = Time in years
Frequently Asked Questions
What is compound interest?
Compound interest is interest earned on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, your money grows exponentially over time — Einstein reportedly called it the 'eighth wonder of the world.'
How does compounding frequency affect returns?
More frequent compounding produces slightly higher returns. Monthly compounding earns more than annual for the same rate. However, the difference becomes smaller as frequency increases (daily vs monthly is minimal).
What is the Rule of 72?
The Rule of 72 is a quick estimation: divide 72 by the interest rate to find how many years it takes to double your money. At 8% return, money doubles in ~9 years (72/8). At 12%, it doubles in ~6 years.