PRACTICAL GUIDE · UTILIA WORK
How compound interest works and how to calculate it
Compound interest adds earned interest to the principal, allowing it to earn further interest.
1 min read
The formula
Final capital = starting capital × (1 + rate per period) raised to the number of periods. Express the rate and time in matching units.
Worked example
€1,000 earning 5% annually for ten years, with no contributions or fees, would become approximately €1,629. Compounding explains the difference from €1,500 under simple interest.
Things to consider
Real investments involve volatility, possible losses, taxes, fees and inflation. Returns are not guaranteed.
General educational information. Examples are illustrative; check the conditions and rules applicable to your situation before making important decisions.
Explore more guides →