Fin Compound Interest — Free Finance Tutorial
Learn Fin Compound Interest in Finance with a free, beginner-friendly tutorial, examples and practice for Indian students on Syllab.in.
TL;DR: Learn Fin Compound Interest in Finance with a free, beginner-friendly tutorial, examples and practice for Indian students on Syllab.in.
Written & reviewed by the Syllab.in Academic Team (CBSE/NCERT subject experts) · Updated
Fin Compound Interest in Finance
Simple interest pays you only on your original amount (the principal). Compound interest pays you interest on your interest too — so your money grows faster and faster over time. This "snowball" effect is the most important idea in all of personal finance, and it rewards starting early more than investing large amounts.
The formula is A = P × (1 + r)^t, where P is the principal, r the annual rate (as a decimal), t the years, and A the final amount. Because t is an exponent, small differences in time produce huge differences in the result. ₹1 growing at 10% becomes ~₹2.6 in 10 years but ~₹17.4 in 30 years.
A handy shortcut is the Rule of 72: divide 72 by the annual return to estimate the years for money to double. At 12% a year, 72 ÷ 12 = 6 years to double. This is why starting to invest at 20 instead of 30 can more than double your final wealth for the same monthly saving.
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