When you save, interest is accumulated and added to your savings. The amount of interest varies depending on the type of savings vehicle. Compound interest is earning interest on your interest.
It sounds a bit confusing, so let’s look at the example below if you save ZWL1 000 every year.
| Year | Total Savings Beginning of Year Z$ | 10% Interest per year Z$ | Total at the end of Year Including Interest Z$ |
|---|---|---|---|
| 1 | 1000.00 | 100.00 | 1100.00 |
| 2 | 2100.00 | 210.00 | 2310.00 |
| 3 | 3310.00 | 331.00 | 3641.00 |
| 4 | 4641.00 | 464.10 | 5105.10 |
| 5 | 6105.10 | 610.51 | 6715.61 |
| 6 | 7715.61 | 771.56 | 8487.17 |
| 7 | 9487.17 | 948.71 | 10435.89 |
| 8 | 11435.89 | 1143.58 | 12579.47 |
| 9 | 13579.47 | 1357.95 | 14937.42 |
| 10 | 15937.42 | 1593.74 | 17531.12 |