In investing, compound amount is compound interest. Interest payments on the total of the initial principal and previously paid interest are referred to as compound interest. Compound interest is sometimes known as interest on interest because the amount of the interest payment is determined through changes in each month rather than the original principal amount.

Compound interest is a type of interest charged to an account. It is different from simple interest because it accumulates over time, so the total amount due starts to grow exponentially. Compound interest occurs when money is compounded periodically, so the initial investment not only earns its own returns, but also includes the accumulated earnings on that investment.

Compound interest is the interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which is based solely on the principal, compound interest allows your money to grow at an accelerating rate over time.

It is often expressed using the formula:
A = P(1 + r/n)^(nt)
Where:
A is the final amount,
P is the principal,
r is the annual interest rate,
n is the number of compounding periods per year,
t is the time in years.

The power of compound interest lies in compounding frequency the more frequently interest is compounded, the faster it grows. It is a cornerstone of wealth-building in savings, investments, and loans.