7 min read
2026-01-30
Compound interest is compounding interest on interest. Unlike simple interest, where income is accrued only on the initial amount, with compound interest the base grows with each period.
**S = P × (1 + r/n)^(n×t)**, where:
S—total amount
P - initial capital
r — annual rate (decimal)
n — number of accruals per year
t — number of years
Deposit 100,000 ₽ at 10% per annum for 5 years:
| Capitalization | Total amount | Income |
|---|---|---|
| Annual | RUB 161,051 | RUB 61,051 |
| Quarterly | RUB 163,862 | RUB 63,862 |
| Monthly | RUB 164,531 | RUB 64,531 |
| Daily | RUB 164,866 | RUB 64,866 |
With simple interest on the same conditions, the income would be 50,000 rubles - 14,531 rubles less than with monthly capitalization.
Quick estimate: divide 72 by the interest rate to get the number of years to double your capital.
The sooner you start investing, the stronger the effect of compound interest will work. Time is an investor's main ally.
See also: Interest calculator, Loan calculator