Simple vs Compound Interest
See how compounding accelerates your money's growth over time compared to simple interest — and why it matters for every long-term financial decision.
Growth Over Time
Simple interest vs. compound interest balance year by year.
Year-by-Year Breakdown
| Year | Simple Balance | Compound Balance | Compound Advantage |
|---|
How This Works
Simple Interest
With simple interest, you earn a fixed amount each year based only on your original deposit. The formula is straightforward: Principal × Rate × Years. Your earnings never grow — they stay flat every year.
Compound Interest
Compound interest reinvests your earnings so that each year's interest also earns interest. Over time this creates exponential growth. The longer the time horizon, the more dramatic the compounding effect becomes.
The Evans Legacy View
Understanding the power of compounding is foundational to long-term wealth planning. Products like Fixed Indexed Annuities and properly structured life insurance leverage compounding mechanics to build tax-advantaged, protected growth.