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General TradingC
Compound Interest
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which is calculated only on the principal amount, compound interest allows earnings to grow exponentially over time, making it a powerful force in long-term investing and savings.
Example
“By reinvesting her trading profits and earning compound interest on her account balance, she turned a $10,000 deposit into over $16,000 in five years at a 10% annual rate.”