Compound Interest

Compound interest, or compounding interest, is basically “interest on interest” – the amount you will earn by reinvesting your capital gains. For example, if in the first year you make 10% on your €1,000 savings, in the second year you’ll earn 10% on €1,100. Compounding is essential for P2P investments – as you usually receive both interest and loan instalments monthly, the compounding rate is relatively high, which increases your profits.