See how your money can work for you, growing steadily with compound interest.
Compound interest is the interest calculated on the initial principal, which also includes all the accumulated interest from previous periods on a deposit or loan.
Unlike simple interest, where interest is only earned on the principal, compound interest allows your money to grow at a much faster rate.
The formula for compound interest is:
A = P(1 + r/n)nt
Where A = the future value of the investment/loan, P = the principal investment amount, r = the annual interest rate, and n = the number of times interest is compounded per year.
Imagine you deposit $5,000 in a savings account that offers a 2% annual interest rate, compounded monthly. After 10 years, your balance will grow to $6,106.29, earning you $1,106.29 in interest.
The sooner you start saving or investing, the more time your money has to grow.
Simple interest is calculated only on the principal amount, whereas compound interest is calculated on both the principal and the accumulated interest.
The power of compound interest can help you achieve your financial goals faster.