Compound Interest: Where Does the Extra 25 Come From? | Finance Explained 05

Hypothetical CNY10,000 at fixed 5% annually, compounded yearly, all earnings retained, no additions/withdrawals, taxes or fees: CNY10,500 after year 1 and 11,025 after year 2, versus 11,000 with simple interest. The extra 25 is interest on the first year’s 500. Not current quotes or guaranteed returns. Actual returns, fees and withdrawals can differ. Licensed illustrative footage. This video does not constitute investment advice. Sources: https://www.consumerfinance.gov/ask-cfpb/how-does-compound-interest-work-en-1683/ https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator

Added 17 Oct 2026