What is Compound Interest?
Compound interest is interest calculated on both the original principal and the interest already accumulated in previous periods — meaning your money earns "interest on interest." This is what makes long-term investments grow much faster than simple interest.
The more frequently interest compounds (annually, quarterly, monthly), the faster the balance grows for the same nominal annual rate, since each compounding period adds a small amount of "interest on interest" sooner.
Formula
A = P × (1 + r/n)^(n×t)