Money
Compound interest
Interest earns interest. Slide the years and watch the curve bend up — slowly at first, then faster.
$1,000
5%
20
Final value
$2,653.30
Interest
$1,653.30
Beats simple by
$653.30
Compound interest earns interest on previously earned interest. It starts slow but accelerates — Einstein supposedly called it the eighth wonder of the world.
Compound interest
A = P × (1 + r)ᵗ
A = final amount, P = principal, r = rate per period, t = periods
Try it
$1,000 at 5% compounded yearly, 3 years.
A = 1000 × (1.05)³ = $1,157.63. Compare to $1,150 with simple interest — small difference now, big over decades.
Rule of 72 — divide 72 by the interest rate to estimate years to double. At 6%, money roughly doubles every 12 years.