Elvis Picardo is a regular contributor to Investopedia and has 25+ years of experience as a portfolio manager with diverse capital markets experience. Suzanne is a content marketer, writer, and ...

Source: Flickr user Dafne Cholet. Simple interest refers to interest that's calculated solely based on the principal, and not any interest that has already accrued. The general formula for computing ...

Simple interest is paid only on the principal, e.g., a $10,000 investment at 5% yields $500 annually. Compound interest accumulates on both principal and past interest, increasing total returns over ...