Compound Interest

Compound interest is defined as interest earned not just on the original amount invested, but also on any additional interest. To put it another way, compound interest is the interest earned on both the initial principal and the interest earned so far on this principle. The concept of adding a carrying fee accelerates the growth of a deposit or loan.

You can use the compound interest calculation to figure out how much an investment is worth after a certain amount of time has passed, or to estimate the rate you’ve earned when purchasing and selling securities. It also enables you to answer questions like how long it will take to double your money.