Entry № 15 · logged Oct 3, 2026Free, no sign-upCompound Interest · Investing

Compound vs simple interest: one of these ledgers is lying by omission.

Simple interest is tidy: the same interest every year, forever. Compound interest posts that interest into the balance and pays on the bigger number next year. Run the slip below — same start, same deposit, same rate — and read the year table as the two interest columns pull apart.

$10,000 at 7% simple posts $700 a year, every year. Compounded, year 20 alone posts several times that — the table shows it.

The growth ledger, Form CI-15. Post a starting balance and a monthly deposit; the slip compounds interest monthly, posts the year-by-year balance, and separates what you deposited from what growth added.

What you post Starting amount ($) Already saved or invested today. Zero is a fine start — the deposit does the early work. Monthly deposit ($/mo) Posted at the end of each month, after that month’s interest.

How it grows Annual return (%) A savings account might post 4%; a diversified portfolio has averaged near 7% after inflation-free math. Returns are never guaranteed. Years Inflation (%) Only drives the “today’s dollars” line — what the final balance buys in current terms.

Year	You posted	Interest posted	Balance

Math: each month the balance earns one-twelfth of the annual return, then your deposit posts. Steady returns are a modelling convenience — real markets wander year to year, and taxes and fees are not in this ledger.

How Compound Interest Worksinterest on interest, posted month by month Rule of 72 Calculatorthe doubling shortcut, checked against the exact math How Long to Double Your Moneydoubling time at every return, in one table Monthly Investment Calculatorno lump sum? the deposit-only ledger Compound Interest Calculatorthe main slip: deposits vs growth, posted

From the ledger

The gap, year by year

Under simple interest the interest column is a flat line: principal × rate, repeated. Under compounding it is a rising line: balance × rate, where the balance includes every prior posting. For the first few years the two ledgers are nearly indistinguishable — which is exactly why simple interest survives in marketing copy for products that quietly do not compound in your favour, and why the honest comparison is always at year 15 or 20, never year 2.

Deposits widen the gap further: each monthly posting starts compounding the month after it lands. The slip’s interest column is the compound ledger; subtract the flat simple-interest line (rate × cumulative deposits, roughly) and the remainder is the pure interest-on-interest effect — the part no amount of depositing faster can replicate without time.

Filed answers

Questions from the growth desk

Which do banks use?

Savings accounts compound (daily or monthly). Simple interest still appears in some loans and in textbook examples — always check which ledger a quote uses.

When is simple interest fine?

For short horizons the gap is small. Under a year, compounding frequency barely moves the total.

Is this investment advice?

No — arithmetic on numbers you type.

Keep going

Also in the ledger

Savings Goal Calculatorworking backwards: what a goal needs each month Emergency Fund Calculatorfund the buffer first, then let growth run Debt Payoff Calculatorcompounding works against you here — clear it first Mortgage Calculatorthe same math, wearing a loan’s clothes Subscription Audit Calculatorfind the monthly deposit hiding in your subscriptions Hourly ↔ Salary Converterwhat the paycheck funding the deposit is worth