Viiteintressidest

Viiteintressidest, also known as the "interest on interest" or "compound interest," is a financial concept where interest is calculated not only on the principal amount but also on the accumulated interest of previous periods. This means that the interest earned in one period becomes the principal for the next period, leading to exponential growth of the total amount over time. The formula for compound interest is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount (the initial amount of money), r is the annual interest rate (in decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years. Compound interest is widely used in banking and investing, as it allows for the growth of wealth over time. It is also a key concept in understanding the power of long-term investing and saving. However, it can also be a double-edged sword, as it can lead to significant losses if the interest rate is negative or if the investment does not perform as expected.