HomeECONOMIC & FINANCEThe Compound Interest Formula

The Compound Interest Formula


When asked to name the greatest invention in human history, Albert Einstein simply replied “compound interest.”

Albert Einstein is also credited with saying: “Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it.”

Compound interest or compounded returns is when your money makes money on previous returns or earns interest on interest. The compound interest formula is calculated by multiplying the principal amount by one plus the annual interest rate by the power of the number of periods the capital will be compounding at to get a total figure for both the principal and what accrues through compound interest. Subtract the principal if you just want the compound interest results.

Here is the exact compound interest formula  that can used for calculating it:

 compound interest formula

Formula answer key:
A = Final amount
P = Initial principal balance
r = Interest rate
n = Number of times interest applied per time period
t = Number of time periods elapsed

Here is the rate of compounding on capital based on annual return rate:

Years it takes capital to double based on annual growth rate

Here is the compounded returns when you double a penny for 30 days

What you have after you double a penny for 30 days.

One of the most powerful thing you can do is grow capital by compounding it year over year and allowing it to grow to astounding levels. 


Forex Signals in Indonesia

Free Forex signal, Technical trading analysis in Indonesia are provided by top forex trading experts. Join and Start receiving forex signals.

Forex Signals in Canada: A Comprehensive Guide

Forex Signals In Canada are provided by top forex trading experts. Daily opportunities for forex signal with expert advice and guidance.

Price Action Trading: 10 Essential Tips for Success

The first step to becoming a better trader is abandoning you own opinions, predictions, and emotions in favor of trading the price action itself. Uptrends, downtrends, and trading ranges on charts become more clear when all personal biases are removed.

Trading Method Definition

A trading method is a specific process and theory for approaching the financial markets in an established way to make money. A trading method brings orderliness of thought and behavior for planning and implementing a trader’s action for the philosophy behind entries and exits.

Follow us


Most Popular


- Advertisement -spot_img