Compound Interest — What It Is and How to Calculate
Compound interest concept, formula, difference from simple interest and its real impact on investing.
What Is Compound Interest?
Compound interestis the process where earned interest is added to the principal, so subsequent periods earn interest on both the original capital and the accumulated interest — "interest on interest."
Formula
A = P × (1 + r/n)^(n×t)
- A: Final amount
- P: Principal
- r: Annual rate (decimal)
- n: Compoundings per year
- t: Number of years
Simple vs Compound
100,000 TL invested at 40% annual rate for 10 years:
| Method | After 10 Years |
|---|---|
| Simple | 500,000 TL |
| Compound (annual) | 2,892,546 TL |
| Compound (monthly) | 5,351,249 TL |
Rule of 72
Quick estimate of doubling time:
Years to Double ≈ 72 / Rate (%)
At 20% annual return, money doubles in roughly 3.6 years.
Calculate Yours
Use our investment calculator to model different rates, durations and monthly contributions.
Disclaimer: This content is for informational purposes only and does not constitute legal, financial or tax advice. For current regulations, consult official sources (Official Gazette, GİB, SSI). Terms of Service.
Written by
Lale Dijital
Independent digital publishing team building financial calculators and guides aligned with Turkish legislation — specializing in Labor Law No. 4857, SSI Law No. 5510, Income Tax Law No. 193 and VAT Law No. 3065.
Editorial process: primary source verification (Official Gazette, GİB, SSI) → calculation testing → 6-month or regulation-triggered refresh.