Let’s talk about simple compound interest

Some of the 21kpm investment options / IPI can provide the member with accumulated returns such as you would see when investigating compound interest.

Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest.

There are many formulae and calculations associated with compound interest, but to start, if we take:

Compound Interest Equation

A = P(1 + r/n)^nt

Where:
A = Accrued Amount (principal + interest)
P = Principal Amount
I = Interest Amount
R = Annual Nominal Interest Rate in percent
r = Annual Nominal Interest Rate as a decimal
r = R/100
t = Time Involved in years, 0.5 years is calculated as 6 months, etc.
n = number of compounding periods per unit t; at the END of each period

For example: With a $15,000 principal sum and an annual compound interest rate of 192% after 1 year, of compounding monthly, the accumulated result is $89,040.

How interesting does that sound to you?

Enter some figures yourself using the calculator.

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