Understanding Compound Interest
Compound interest is the interest calculated on both the initial principal and the accumulated interest from previous periods. Albert Einstein reportedly called it "the eighth wonder of the world." The more frequently interest is compounded, the faster your investment grows.
The formula is: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual rate, n is the compounding frequency, and t is time in years.