What is compound interest?
Compound interest is interest earned on previous interest, not just the initial principal. $1,000 at 8% simple interest earns $800 over 10 years. Compounded annually at 8% it earns $1,159 — and the gap grows exponentially over longer periods. The 'eighth wonder of the world' per Einstein.
More context
Compound interest is interest earned on previous interest, not just the initial principal. $1,000 at 8% simple interest earns $800 over 10 years. Compounded annually at 8% it earns $1,159 — and the gap grows exponentially over longer periods. The 'eighth wonder of the world' per Einstein. The exact answer depends on your specific situation — the numbers above are a strong starting point, but the right next step is to plug in your actual figures.
For a deeper analysis, use one of the related tools below — they take your specific income, debt, location, and goals as inputs and produce a tailored answer.