Tag: simple interest

**This post contains affiliate links and the publisher may be compensated if you make a purchase after clicking on these links.** Albert Einstein reportedly said compound interest is the most powerful force in the universe.  Of course, the earliest known written report of this statement was about 30 years after he died, so he wasn't in position to confirm or dispute saying it.  But given the genius of the statement, we hope Mr. Einstein would appreciate it being attributed to him. To understand why Einstein, or any genius, may utter this statement it may help to review the difference between compound interest and simple interest.  Simple interest is where the interest that accrues doesn't get added to the principal to determine the next period's interest accrual.  Basic example: the bank offers a deal where you deposit $1,000 on January 2nd and must come back each week and collect $1.  The principal never increases about $1,000, but at the end of the year you...