How does compound interest work?

Compound interest begins with an initial sum of money deposited or invested.

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Interest Calculation

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Interest is calculated not only on the initial amount but also on the accumulated interest from previous periods.

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Compounding Periods

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The compounding period can be daily, monthly, quarterly, or annually, affecting how often interest is added to the principal.

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Higher Returns

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Compared to simple interest, compound interest results in higher returns due to the effect of earning interest on interest.

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