Compound Interest

wealthymatters.comWe all pick up some pretty important stuff in primary school but it’s doubtful if we really appreciate their importance at the time.Compound interest is one such thing.For many people  it’s a formula to be memorized to pass a few math tests only to be forgotten or at least be pushed back to the recesses of their minds along with all the rest of the facts memorized in childhood.

To refresh memories, compound interest is the type of interest calculation where periodic interests accrued are not paid out but retained and the accrued interests earns interest . The formula for calculating compound interest is:

A = P\left(1 + \frac{r}{n}\right)^{nt}


  • A = final amount
  • P = principal amount (initial investment)
  • r = annual nominal interest rate (as a decimal)
  • n = number of times the interest is compounded per year
  • t = number of years Read more of this post
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