How Compound Interest Grows Your Money

Compound interest is calculated using the formula A equals P times (1 plus r divided by n) raised to the power of n times t, where P is the starting principal, r is the annual rate, n is how many times interest compounds per year, and t is the number of years.

Why Compounding Frequency Matters

The more frequently interest compounds, the faster your money grows, because you start earning interest on previously earned interest sooner.