Simple vs compound interest
Simple vs compound interest is an interactive experiment in Interest & Savings, a free simulation from StudyFi Lab that runs right in your browser.
With simple interest, interest is only ever paid on the original deposit: u = G₀ · p · t. With compound interest, each period’s interest joins the balance and earns interest itself: Gₙ = G₀ · rⁿ, where r = 1 + i is the growth factor per period and n = m · t the number of periods. School mode uses the conformal rate i = (1 + p)^(1/m) − 1, so a year still yields exactly p; bank mode divides, i = p / m, and yields slightly more. The 15 % tax is withheld from every interest payment, so r = 1 + i · (1 − 0.15); days are counted in a 365-day year.
Try this: Set 8 % for 3 years and guess the gap before you check. Then stretch the time to 30 years — the gap outgrows the simple interest itself.
Frequently asked questions
What does the “Simple vs compound interest” experiment show?
With simple interest, interest is only ever paid on the original deposit: u = G₀ · p · t. With compound interest, each period’s interest joins the balance and earns interest itself: Gₙ = G₀ · rⁿ, where r = 1 + i is the growth factor per period and n = m · t the number of periods. School mode uses the conformal rate i = (1 + p)^(1/m) − 1, so a year still yields exactly p; bank mode divides, i = p / m, and yields slightly more. The 15 % tax is withheld from every interest payment, so r = 1 + i · (1 − 0.15); days are counted in a 365-day year.
How do I try “Simple vs compound interest”?
Set 8 % for 3 years and guess the gap before you check. Then stretch the time to 30 years — the gap outgrows the simple interest itself.
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