Compound interest introduction | Interest and debt | Finance & Capital Markets | Khan Academy

Courses on Khan Academy are always 100% free. Start practicing-and saving your progress-now: www.khanacademy.org/economics...
Learn about the basics of compound interest, with examples of basic compound interest calculations. Created by Sal Khan.
Finance and capital markets on Khan Academy: Interest is the basis of modern capital markets. Depending on whether you are lending or borrowing, it can be viewed as a return on an asset (lending) or the cost of capital (borrowing). This tutorial gives an introduction to this fundamental concept, including what it means to compound. It also gives a rule of thumb that might make it easy to do some rough interest calculations in your head.
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: / channel
Subscribe to Khan Academy: kzbin.info_...

[@XY-vq7jo]

me 10 min before exam : watching this x2 speed

[@calliopeberenices3851]

😹 😹 😹 💔

[@sh1twhisker]

Hope u did well 🤣

[@iceylife5876]

Bro same 😂

[@aquilaayodelepuddinggargli5921]

😂

[@7skies246]

Me 2 min before exam : watching this x10 speed

[@Briansampson7852110]

Thank you for this video! In school I was only given the compounding interest formula, which I never understood how it worked, and then told to just plug numbers into the formula and get my answer . After this explanation I see how the formula works. Can't believe I never realized what the (1 +r) part was doing this entire time!

[@fromanotherdayfilm]

Guess I have to start learning proper ways to retire in 8th grade.

[@elleellelleelle]

TrexK when did u learn it

[@vani808]

forever army, sone, and wannable We got taught about compound interest in my senior year. Wayyyy too late. Should've been way earlier.

[@menacing9020]

@@TrexK oof I'm learning this in 7th grade

[@diamond_gamer7289]

everz I'm learning this in yr11... my bro is in grade8 and there's no way that they can do this!

[@tempo_gg6106]

@@diamond_gamer7289 yall funny

[@orphanspanker4279]

I was absent for a week, and this fella made me catch up on probably all of what we did.

[@user-yk1ky5bh4u]

THANK YOU! Going back to school at 47 years means my math skills are a little rusty. This video helped tremendously.

[@2002loprafael]

THANK YOU. GOD BLESS YOUR SOUL

[@nagamanibhukya4423]

I just tried another video but this formula which you explained Sal Khan is a lot easier for me now . Thank you for explaining the formula for compound interest

[@Wickedlikesugar]

You are awsome! Even though it is simple, you explain it very well for those who forgot :) Thank you!

[@Garwesvinu9e]

Short,precise,simple,sweet...you make my short list for the Nobel

[@mohonest_98agd57]

When I grow up, I wanna invent my own math formula for middle school kids

[@miles3880]

make it super complicated too

[@LunaEclipse-si2qo]

You must hate kids or something.

[@WantGaming]

Watching this after 7 years!

[@khaiahmann9192]

Thanks, this was pretty helpful.

[@user-ww6ii6zn8m]

Awesome video! Compound interest is so important for achieving long term wealth!

[@thomery9869]

Thanks a lot for the video, it simplified things a lot for me (compared to how my teacher explained it).

[@charmyykittyy]

Thank you so much I finally understand this!!

[@edwardortiz7541]

This helped me more than my teacher did

[@FireStrikeKiki]

These videos help so much! (especially when you haven't studied for weeks)

[@brennaarthur2173]

Your videos are extremely helpful with my finance homework

[@padparad5cha]

This really helped me with my homework

[@ForeseenParadox]

Thanks sal! Great video as usual.

[@Oxcilic]

Wow, I did this JUST last term and I really wished there was a Khan video for it. I can't believe my bad luck...

[@kyles7686]

Thanks this helped so much

[@audreypark9625]

Im in fifth grade and i could understand pretty well...

[@paige5066]

I’m in ninth grade and can’t understand at all gg kiddo

[@sethcolburn7234]

Hands down best video ever

[@JourneytoBetterSelf]

Very Helpful Thanks For The Video

[@darknessbtw-_-9557]

Now I understand why I can't balance a checkbook

[@marcussmithwick6326]

Your amazing dude.

[@jonny5499]

thank you so much your video really helped me, liked and subscribed

[@aleh.6302]

Helped a lot Thanks!!!

[@Unendlichkeit.]

Is kahn academy for Cambridge examinations

[@cceladon7937]

I'm watching this in may 2020 (quarantine)

[@LFCdiehard1]

I love you man, thanks!

[@TheKmanOfSmash]

There is one on this certain topic that Mr. Khan did a long time ago in his finance playlist, I believe. You may not have been searching hard enough!

[@mcdonalds7722]

Great Video

[@susantwyford2973]

thank you

[@sathyasathya5553]

This video is useful

[@randomgamerd2544]

Hold up wait a minute something ain’t right

[@johannesasfaw]

unfortunately, I'm watching it to see how fast my student loans would double because they work with compound interest...

[@NoOneAM2]

you are still paying it aren't you?

[@johannesasfaw]

@@NoOneAM2 paid it off

[@shaffato9730]

@@johannesasfaw nice

[@johannesasfaw]

Low rate of 1% helps (for youth)

[@hannahrae8035]

This video is very helpful. Could you please also do a video on decreasing compounds? I don't know what it's called but when say for example a car decreases by 10% of its value at that point every year? Sorry if this isn't very clear!

[@NomadVoyage]

Hi Mr. Khan. Very good video. the POWER of Compounding Interest Annually, Monthly, Weekly, or event BETTER Daily. Julia

[@jeriesjos]

where is that next video to ease the difficult calculation??

[@lagdance]

Thanks...Don't know why Pre-calc requires me to learn this...

[@xhourglazzezx]

omg this saved my life. thank you so much! :D

[@theaaboshow995]

nope, get a life klm weight loss journey

[@evancollins2811]

Gud vid thx m8

[@MathstimewidSagarRaya]

Very useful video

[@My_Sun_Shine.]

thank you so much 😭

[@michaelvenker8561]

very well don

[@stormrider1375]

"If only statesmen had been compelled to study law of the laws of Compound Interest, the fate of the whole human race might have been very different." - William Joyce, "Twilight Over England", 1940

[@oceancuh]

nice man!!!!!!!

[@dainan4875]

You write better on a computer that I do in real life

[@vanshbilandani5942]

lol

[@AK.]

Thanks

[@stayfocusedplays4078]

great vid! btw you sound like dj vlad...hehe

[@danielcooper5698]

Can you help me solve this? I have $10,000 invested at 20% interest per year, compounded daily. BUT, in order for me to collect the interest (and reinvest it) I have to pay 40cents (regardless of how many days of interest have accumulated). What is the optimal number of days that I should wait to collect my interest and reinvest it?

[@rashi2745]

Maybe do it YOURSELF

[@lionans9443]

good video

[@chrislaterza1275]

should've given the formula first

[@david.ricardo]

Chris LaTerza no

[@prumchhangsreng979]

Nice

[@user-vu4wo3vu3z]

Awsome

[@DeathTrapProductions]

I appreciate this resource. I've gone through countless videos trying to understand the COMPOUND INTEREST FORMULA to no avail. Apparently it's P x (1 + r/n)to the power of n x t. P = Principal, R = annunal percentage rate in decimal form, and t = time in years. Someone please help. I understand the concept but NEED to master the formula for which I cannot find tutorials.

[@iqxwizz7518]

are you sure the formula isnt P x (1+r)^n?

[@firasahmed2254]

how does this guy remember all of these maths topics

[@Josama0214]

This isn't a Math topic

[@cakepopcrush]

I am following until he talks about the log buttonI got 8% from pressing the equation from the log button but the only two percentages I've heard was 10 and 7%

[@jeffmckeown023]

I really really really wish he would have solved this. I was following and then realized he wasn't going to solve. Aarrggg! C'mon!!

[@kingmakerzz123]

How about finding the total amount of the money is the interest rate per month and the deposited cash is compounded monthly

[@klmweightlossjourney44]

why cant i freakin understand!?!?!?!?!?!?

[@OffTheCeiling]

Because they aren't qualified teachers. their methods are illegitimate to the national curriculum. they use what they knew

[@ILOVECHICKEN698]

Because it's meant to be uselessly hard to understand fuck this shit

[@vinniesmyyth334]

Because you're stupid

[@queen_ofall2360]

You can understand it for sure, a human inventing this. Look at other channel some of them explain it more easier....chill you've got this!! I found this channel and he explain it prettey them well: kzbin.info/www/bejne/hYKcfqlon9yEjdE

[@baileyhainsworth685]

does anyone know how you can write the function for a compound interest equation from a graph, cause I can't figure it out and my teacher wont explain it.

[@jtthesecond]

i understand

[@jumibhattacharjee6164]

i am in 4th grade and i sorta understand

[@anandbg3460]

I wanna make a calculator of compound interest using programming

[@ahmedhazem7553]

is compound intrest per annum same as manually?

[@tianvlasic]

I am 3rd grade and I am a math teacher of 6 grade now I need to teach them compound interest in 8th grade. My whole life is math.

[@simongenich4407]

Tian Vlašić better not be an English teacher

[@tianvlasic]

Simon Genich I am from Croatia

[@bkbeya77711]

I k ow your trying to help, bit I cNt see anything on the screen behind you.

[@roycebracket8816]

x = 7.27 years btw in case you were wondering

[@jake_thesnake8384]

if u guys dont get this i feel bad cause its easy peasy

[@jorgejr5876]

So how do i find out how to start getting compound interest ? What type of investment do I have to make to take advantage of compound interest ?

[@ulans.3965]

+Jorge jr you can invest in mutual funds

[@haochengliang9741]

Index fund

[@15RMW]

This is what he meant A=P(1+R/T)NT A =total amount P=principal R=rate N=compounding period T=time because I could not understand what he was saying. (p.s. don't forget B.E.D.M.A.S)

[@gautam9339513131]

its B O D M A S and not B'E'DMAS!

[@gautam9339513131]

its B O D M A S and not B'E'DMAS!

[@bench175]

guys, stop being silly. It's PEMDAS

[@MrMaxggangster]

Can any math genius here answer this question? If Joe invests $1,000 in his portfolio every month into a ETF that grows 10% a year. how long will it take Joe to grow his portfolio to $1M? $10M? 100M? If that ETF grows 10% every year does that mean it grows 0.00833 every month?

[@potatoleo5751]

Thank u man really helpful vid

[@johantheking7874]

The answer is 100 x 1.1 to the 7.27254089735 power = 200

[@H_factoryHI]

Halona w/here

[@necesitoserotonin2274]

my exam on this is like in 30 mins

[@hamida1370]

Should’ve told us the formula and also I didn’t understand the question at the end

[@youtubebaby7940]

I like turtles

[@theaaboshow995]

get a lfife

[@troupemember14]

My last brain cell before an exam

[@davialbuquerque4964]

I live in Canada. Maybe I can help you. Where are you from?

[@davialbuquerque4964]

@Karan Because I like to play Sonic The Hedgehog with my Sega Mega Drive console. Furthermore, Canada is the only place you can find one of those. Do you live in Illinois? Are you American?

[@LunaEclipse-si2qo]

I'm being forced to watch this. :'D

[@kingmakerzz123]

If*

[@ahadabdul7496]

Of doing this y10

[@ericzhu1441]

who else is watching this in 2020

[@ramalakshmikaza4166]

Why did we get 11% as Interest? 1:34

[@wce0977]

It is 10% of the previous year which was 110

[@paulyoon8307]

yee

[@jrs7541]

is this taught in high school? or university?

[@rxvenger3579]

9th grade.

[@edwardwinryfan1]

SHIFT SOLVE

[@indeed7289]

can some one explain something to me in simple plain English if i have a term deposit account which pays monthly 2% does that mean i get 2% interest every single month of the year equating to 24% a year im having a hard time understanding the fact sheets banks have given me they say things like this Term at maturity monthly quarterly 1 month 2% 2 months 3.10% 3 months 3.15% 12 months 3.35% 3.25% 3.30% so what does all this mean so say for example with the 12 months does that mean if i start of with $5000 each month i get $162.5 from interest? 

[@safarsafeer4244]

First let me clear it for you: in the real life you go to the bank then you give them money (deposit) equals to 5000$. Then they say our offer is that it will pay you 2% every month and you will get the cash after a year... That means in the first month you will get interest on your deposit (5000*2% = 100), now you didn't get any cash yet, all the money is still with the bank, you will get all the money after one year. In the second month, they should not give you interest on your original money (which is 5000$) ONLY because your original money and the interest on it is still with bank, in the second month... So they should give you interest on (your original money plus your interest on the original deposit) which is ((Original money + interest on the Original money) * interest rate) = ((5000$ + 100 )* 2%) = 102 . In the third month it is the same procedure they will give you interest on the Original amount plus the interest on the (Original amount + the interest on the Original money) plus the interest on the ( ( interest on the Original money) + (Original money + interest on the Original money) * interest rate + {(Original money + interest on the Original money) * interest rate } * interest rate ).. So it equals to = ( (5000$ + 100 ) + (5000$ + 100 )* 2%) + ( (5000$ + 100 ) + (5000$ + 100 )* 2% ) * 2% ) And so on until the last month... so you don't (add 2%) 12 times to get the compound interest rate. That is wrong because what you did there is taking 24% on 5000 only... Which would be the answer to the following question: find an interest rate of 24% on 5000$... I hope that made it clear for you... there is a formula to calculate the the whole money with the compound interest which is The formula for annual compound interest is A = P (1 + r/n) ^ nt: Where: A = the future value of the investment , including interest P = the principal (deposit) investment amount (the initial deposit ) /// in your question it is 5000$ r = the annual interest rate (decimal) /// meaning not 5% but 0.05 n = the number of times that interest is compounded per year /// in your question it is 12 months so it is 12 times t = the number of years the money is invested /// in your question it is one year keep in mind that this formula calculates not only the compound interest but the whole amount with the compound interest along with it Now to get the compound interest only: it is so simple just think about it.. we have our original money along with all the compound interest.. So to get the compound interest only we simply subtract the original amount.. So : The compound interest = P (1 + r/n) ^ nt - p After Simplifying (taking P as a common factor) : The compound interest = P ( (1 + r/n) ^ nt - 1 ) *Lastly: sorry for the bad English* *:)* I hope that helped..

[@tahsinrahman1668]

mr.khan no offence but its kinda confusing...

[@vinniesmyyth334]

It's pretty easy tbh

[@kaven101]

@@vinniesmyyth334 no it's not tbh

[@vinniesmyyth334]

@@kaven101 You do this in Highschool. 14 year olds do this. Yes its easy

[@kaven101]

@@vinniesmyyth334 The way he teaches it is confusing. He should have started off with the formula A=P(1+r/n)t(n). For someone who is trying to learn this freshly this video is not a good example. I love khan vids but this one fell flat. It's not for me so save your insults. People have different opinions, you learn that before kindergarten. Geesh. And in my opinion, this is a bad vid for beginners. ✌

[@vinniesmyyth334]

@@kaven101 im not insulting you im telling you the truth. You lesan this in school when you are 14

[@chrissadi]

have an exam on Wednesday I have tried to understand compound interest for 2 month know but I just still don't understand it after all this hard studying paying hard attention in class I still don't get it (grade 11 essential exam) guest my parents are going to send me back to Africa because I have a 87% chance of failing

[@barryevans249]

+King Ray Give up!

[@julezandreipizarro9547]

What app is he using

[@billcipher1531]

Khan Academy

[@tahsinrahman1668]

Pixel Productions its called paint...

[@tahsinrahman1668]

Pixel Productions like ms.paint

[@madhumantra]

Excuse me sir but, why do you keep on repeating your words always, just after some sentences?

[@caitlinx54]

Why are you multiplying it by 1.1… What does that stand for? Is that the interest then why is not just written as 10%?

[@JorgeOrpinel]

100% of something is the same as multiplying that something by 1. Does that give you a tip?

[@feetsquared]

You are increasing by 10%, which means you are having the original amount plus the 10%

[@emarskineel]

Jorge Orpinel thank you for putting it that way! Opened my eyes to the formulas

[@niquenique857]

Uhhh I don’t get this 🙄

[@JorgeOrpinel]

"Calculating compounding interest is pretty difficult"? a few exponentials or logarithms! Let's define difficult, aren't kids supposed to learn all this before hitting high school?

[@hsuanhsuan5988]

I agree with you ...it's quite easy even though I am a high school student . In my opinion, the same lesson our teacher taught was more difficult than this ... but it's still a helpful video ...

[@feetsquared]

True i'm learning this right now as a matter of fact... And I'm in 7th Grade!

[@ImagineCraft7]

We've only started learning this in grade 11 -.-

[@modernmarvel]

+EpicAdventurer Awesome! I wish I had this in school. Keep up the good work and you'll be well off.

[@RoxsannePatel]

+Jorge Orpinel if you didnt know, people of all ages are watching this! for all you know people who havenever been to school but have a phone and 3g must be watching this! dont judge on how fast a person learns, judge on their interest of learning

[@MsScruffy4]

frustrating. So how long does it take ........already. Apparently a long time if you are writing it out and then not telling us. ahhhhhhhhhhhhhhh!

[@shubhamnadgonde8767]

I could not understand it well

[@srinuk2038]

we want something different