On the surface, an interest rate is just a number. How that number applies to debt or equity opens up a world of possibilities. The first consideration is always whether it’s simple interest vs.

If you’re an investor looking to understand the benefits of compound interest, consider the example set by the legendary Warren Buffett. The 93-year-old’s net worth has grown to $137 billion over the ...

When we hear the term "millionaire," it's easy to conjure up images of the nation's elite. But believe it or not, there are actually millions of millionaires in the country, and it's not because they ...

Capital at risk. The value of your investments can go up and down, and you may get back less than you invest. Compounding is a process where interest is credited, not only to the original ‘principal’ ...

Simple interest is paid only on the principal, e.g., a $10,000 investment at 5% yields $500 annually. Compound interest accumulates on both principal and past interest, increasing total returns over ...

Owners of small businesses often have limited sources of income and are further burdened by expenses, making it extremely difficult to contribute generous sums to saving accounts. Even in money-tight ...

Learn what the stated annual interest rate is and how to calculate it without compounding, plus how it compares to the effective annual rate.

Elvis Picardo is a regular contributor to Investopedia and has 25+ years of experience as a portfolio manager with diverse capital markets experience. Michael Boyle is an experienced financial ...

Source: Flickr user Dafne Cholet. Simple interest refers to interest that's calculated solely based on the principal, and not any interest that has already accrued. The general formula for computing ...

Simple interest calculates earnings or payments based solely on the initial principal, while compound interest grows by calculating interest on both the principal and the accumulated interest over ...

In the real world, simple interest is rarely used. When you deposit money into an interest-bearing account, or take out a line of credit, the interest that accumulates is added to the principal, and ...