fundamentals
compound interest
Interest calculated on both the initial principal and the accumulated interest from previous periods.
Example
"Thanks to compound interest, her $10,000 investment grew to $40,000 over 20 years."
💡 Memory Tip
Compound means built on top of itself. Interest on interest — the snowball effect of money.
Etymology
Compound (combined) + interest — interest that compounds (builds on itself).
Common Misspellings
compund interestcompound intrestcompond interest
Related Terms
See Also
simple interestannual percentage rateinvestment