See how your investments grow with the power of compounding
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Albert Einstein reportedly called it the "eighth wonder of the world".
A = P × (1 + r/n)^(n × t)
| Feature | Simple Interest | Compound Interest |
|---|---|---|
| Calculated on | Principal only | Principal + accumulated interest |
| Growth | Linear | Exponential |
| Returns | Lower | Higher over time |
| Best for | Short-term loans | Long-term investments |
The more frequently interest is compounded, the higher the total return. Daily compounding yields slightly more than monthly, which yields more than yearly.
Savings accounts, fixed deposits, mutual funds, bonds, and most long-term investments use compound interest.