Compounding works like this...
Let's assume you have $10,000.00 invested in something with 11% interest for 5 years...
Year 1 - 10,000.00 x 111% = $11,100.00
Year 2 - 11,100.00 x 111% = $12,321.00
Year 3 - 12,321.00 x 111% = $13,676.31
Year 4 - 13,676.31 x 111% = $15,180.70
Year 5 - 15,180.70 x 111% = $16,850.58
And so on and so forth.
There are a ton of little nuances as to how it is done, but this is assuming that it is compounded annually. In all likelyhood, it would compound far more often than that.
When dealing with compound interest, the main thing is length of time - it is ridiculous how much you will have after many years based on a relatively small initial investment. The reason I multiplied by 111% is because I wanted to account for an 11% gain in the investment throught the year.
Make a bit more sense?
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