Compound interest

compound interest

the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest. Compound interest is standard in finance and economics.

Compound interest is contrasted with simple interest , where previously accumulated interest is not added to the principal amount of the current period, so there is no compounding. The simple annual interest rate is the interest amount per period, multiplied by the number of periods per year. The simple annual interest rate is also known as the nominal interest rate (not to be confused with the interest rate not adjusted for inflation, which goes by the same name).

— Compound Interest – Wikipedia

6:23pm on August 20, 2021 from Nelson, New Zealand.


uid: 3bacf841-98f6-4ae5-8968-e83279edcceb
title: Compound interest
creator: Silas Jelley
primary: references
secondary: definitions
available: 2021-08-20 18:23:17
created: 2021-08-20 18:23:17
slug: definitions/compound-interest
source: {'title': 'Compound Interest – Wikipedia', 'url': 'https://en.wikipedia.org/wiki/Compound_interest', 'text': ': compound interest\n\n    the addition of [interest][1] to the [principal sum][2] of a loan or deposit,\n    or in other words, interest on interest. It is the result of reinvesting\n    interest, rather than paying it out, so that interest in the next period is then\n    earned on the principal sum plus previously accumulated interest. Compound\n    interest is standard in [finance][3] and [economics][4].\n\n    Compound interest is contrasted with _[simple interest][5]_ , where previously\n    accumulated interest is not added to the principal amount of the current period,\n    so there is no compounding. The _simple annual interest rate_ is the interest\n    amount per period, multiplied by the number of periods per year. The simple\n    annual interest rate is also known as the [nominal interest rate][6] (not to be\n    confused with [the interest rate not adjusted for inflation][7], which goes by\n    the same name).\n\n[1]: https://en.wikipedia.org/wiki/Interest "Interest"\n[2]: https://en.wikipedia.org/wiki/Principal_sum "Principal sum"\n[3]: https://en.wikipedia.org/wiki/Finance "Finance"\n[4]: https://en.wikipedia.org/wiki/Economics "Economics"\n[5]: https://en.wikipedia.org/wiki/Interest#Calculation "Interest"\n[6]: https://en.wikipedia.org/wiki/Nominal_interest_rate "Nominal interest rate"\n\n[7]: https://en.wikipedia.org/wiki/Real_versus_nominal_value_(economics) (Real versus nominal value (economics))', 'wordcount': 167, 'html': '\ncompound interest
\n\nthe addition of interest to the principal sum of a loan or deposit,\nor in other words, interest on interest. It is the result of reinvesting\ninterest, rather than paying it out, so that interest in the next period is then\nearned on the principal sum plus previously accumulated interest. Compound\ninterest is standard in finance and economics.
\nCompound interest is contrasted with simple interest , where previously\naccumulated interest is not added to the principal amount of the current period,\nso there is no compounding. The simple annual interest rate is the interest\namount per period, multiplied by the number of periods per year. The simple\nannual interest rate is also known as the nominal interest rate (not to be\nconfused with the interest rate not adjusted for inflation, which goes by\nthe same name).
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\n\n'}
filename: /home/silas/notes/glossary/compound-interest.md
updated: 2021-08-20 18:23:17
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