What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. It helps your money grow faster over time.
How is compound interest calculated?
Compound interest uses the formula: A = P(1 + r/n)^(nt) where P is principal, r is annual rate, n is compounding frequency, and t is time in years.
Which compounding frequency gives the highest return?
More frequent compounding (daily or monthly) gives slightly higher returns. However, the difference is usually small for most practical purposes.