{"id":39113,"date":"2025-03-18T16:26:47","date_gmt":"2025-03-18T15:26:47","guid":{"rendered":"https:\/\/fidulex.ch\/?p=39113"},"modified":"2025-04-28T14:31:03","modified_gmt":"2025-04-28T12:31:03","slug":"compound-interest-explanations-fidulex-fiduciary-formula","status":"publish","type":"post","link":"https:\/\/fidulex.ch\/en\/compound-interest-explanations-fidulex-fiduciary-formula\/","title":{"rendered":"Compound interest: Explanations and formula"},"content":{"rendered":"
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Compound Interest: How Does It Work?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Compound Interest<\/strong> are a smart way to save money and earn a higher return. Generally speaking, when you invest a sum of money, you receive interest on it every year.\u00a0<\/p>

In the case of compound interest, if you leave it on your account, it is added to your capital. In other words, you can earn interest every year on your interest.<\/strong><\/p>

Another way of thinking about it is to see compound interest as a snowball that gets bigger and bigger as it rolls along.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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What's the Difference between Simple and Compound Interest? <\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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When you place money in the bank and receive interest on it, you can receive both simple interest and compound interest<\/strong>.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Simple Interest<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Simple interest is calculated on your initial capital<\/strong>This is the amount you invested in the first place. Unlike compound interest, simple interest is not added to the principal, so you'll receive the same amount every year.<\/p>

For example, if you have invested CHF 1,000 in an account with an interest rate of 5%, you will receive CHF 50 each year.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Compound Interest<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Compound interest, on the other hand, is more advantageous. Instead of being based on the initial capital invested, compound interest is added to the capital each year. The interest received is then calculated on this new total.<\/p>

To return to our previous example, if you invest CHF 1,000 with an interest rate of 5%, you'll receive 1,050 in the 1st year, which will be your new total. The following year, you'll receive 5% of 1'050, equivalent to CHF 52.50, and so on.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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How do I Earn Compound Interest?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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To receive compound interest<\/strong>, you'll need to deposit an amount in an account. You don't need to deposit a very large sum to receive compound interest. For example, you can invest in :\u00a0<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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