Learn the basics of Simple and Compound Interest with easy formulas, examples, and clear differences to help you score better in exams and understand financial growth.

Simple interest calculates earnings or payments based solely on the initial principal, while compound interest grows by calculating interest on both the principal and the accumulated interest over ...

Whether you are paying interest or being paid interest, it's important to fully understand how that interest is calculated. There are two basic types of interest: simple and compound. How each type is ...

If you’re an investor looking to understand the benefits of compound interest, consider the example set by the legendary Warren Buffett. The 93-year-old’s net worth has grown to $137 billion over the ...

Simple interest is paid only on the principal, e.g., a $10,000 investment at 5% yields $500 annually. Compound interest accumulates on both principal and past interest, increasing total returns over ...

Capital at risk. The value of your investments can go up and down, and you may get back less than you invest. Compounding is a process where interest is credited, not only to the original ‘principal’ ...

Affiliate links for the products on this page are from partners that compensate us and terms apply to offers listed (see our advertiser disclosure with our list of partners for more details). However, ...

Affiliate links for the products on this page are from partners that compensate us and terms apply to offers listed (see our advertiser disclosure with our list of partners for more details). However, ...

If you invested $10,000 at 5% simple interest for 10 years, you would receive $500 in interest every year, for a total of $5,000 in earned interest at the end of year 10. This would make your total of ...

Elvis Picardo is a regular contributor to Investopedia and has 25+ years of experience as a portfolio manager with diverse capital markets experience. Michael Boyle is an experienced financial ...

There are two different ways of calculating interest -- simple and compound. Here's how to calculate each, as well as the key differences and similarities between the two. Simple interest is well, ...