[{"data":1,"prerenderedAt":465},["ShallowReactive",2],{"term:compound-interest":3},{"term":4,"related":456},{"id":5,"title":6,"body":7,"category":436,"description":437,"extension":438,"faq":439,"meta":443,"navigation":444,"path":445,"related":446,"seo":449,"stem":450,"takeaways":451,"__hash__":455},"terms\u002Fterms\u002Fcompound-interest.md","Compound Interest",{"type":8,"value":9,"toc":429},"minimark",[10,15,19,22,26,301,422,426],[11,12,14],"h2",{"id":13},"understanding-compound-interest","Understanding Compound Interest",[16,17,18],"p",{},"Compound interest adds earned interest back to the principal, so each later period earns interest on a larger balance.",[16,20,21],{},"The more often interest compounds and the longer money stays invested, the larger the 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",[27,305,307,320],{"className":306},[34],[27,308,310],{"className":309},[38],[40,311,312],{"xmlns":42},[45,313,314,318],{},[48,315,316],{},[51,317,60],{},[97,319,60],{"encoding":99},[27,321,323],{"className":322,"ariaHidden":68},[104],[27,324,326,329],{"className":325},[108],[27,327],{"className":328,"style":113},[112],[27,330,60],{"className":331,"style":141},[117,118]," is the principal, ",[27,334,336,349],{"className":335},[34],[27,337,339],{"className":338},[38],[40,340,341],{"xmlns":42},[45,342,343,347],{},[48,344,345],{},[51,346,82],{},[97,348,82],{"encoding":99},[27,350,352],{"className":351,"ariaHidden":68},[104],[27,353,355,359],{"className":354},[108],[27,356],{"className":357,"style":358},[112],"height:0.4306em;",[27,360,82],{"className":361,"style":239},[117,118]," the annual rate, ",[27,364,366,379],{"className":365},[34],[27,367,369],{"className":368},[38],[40,370,371],{"xmlns":42},[45,372,373,377],{},[48,374,375],{},[51,376,85],{},[97,378,85],{"encoding":99},[27,380,382],{"className":381,"ariaHidden":68},[104],[27,383,385,388],{"className":384},[108],[27,386],{"className":387,"style":358},[112],[27,389,85],{"className":390},[117,118]," the compounding periods per year, and ",[27,393,395,408],{"className":394},[34],[27,396,398],{"className":397},[38],[40,399,400],{"xmlns":42},[45,401,402,406],{},[48,403,404],{},[51,405,95],{},[97,407,95],{"encoding":99},[27,409,411],{"className":410,"ariaHidden":68},[104],[27,412,414,418],{"className":413},[108],[27,415],{"className":416,"style":417},[112],"height:0.6151em;",[27,419,95],{"className":420},[117,118]," the number of years.",[11,423,425],{"id":424},"example","Example",[16,427,428],{},"$1,000 at 5% compounded yearly for 10 years grows to about $1,628.89.",{"title":430,"searchDepth":431,"depth":431,"links":432},"",2,[433,434,435],{"id":13,"depth":431,"text":14},{"id":24,"depth":431,"text":25},{"id":424,"depth":431,"text":425},"personal-finance","Interest earned on both the original principal and on interest already earned.","md",[440],{"q":441,"a":442},"What is the rule of 72?","Divide 72 by the annual rate to estimate the years needed to double money. At 6%, that is about 12 years.",{},true,"\u002Fterms\u002Fcompound-interest",[447,448],"interest-rate","time-value-of-money",{"title":6,"description":437},"terms\u002Fcompound-interest",[452,453,454],"Compound interest earns interest on past interest.","Time is the biggest driver of compounding.","More frequent compounding gives a slightly higher result.","e1_q5F9YKw5GZmFGoLd8e-hD3ctbWXktrqJeIxnu8n8",[457,461],{"title":458,"description":459,"path":460},"Interest Rate","The cost of borrowing money, or the return for lending it, as a percentage per year.","\u002Fterms\u002Finterest-rate",{"title":462,"description":463,"path":464},"Time Value of Money","The idea that money now is worth more than the same amount later.","\u002Fterms\u002Ftime-value-of-money",1793226379146]