There are two primary ways to compute interest: compound or simple.
Financial Planner Mike Murkins provides examples of the difference between simple and compound interest on today's Finance Moment Podcast and how you can make compound interest work for you as part of your investment strategy.
Compound interest, as defined by Merriam-Webster's dictionary, is the interest computed on the sum of an original principal and accrued interest.
Simple interest is defined as interest paid or computed on the original principal only of a loan or on the amount of an account.
To learn more about the difference between compound interest and simple interest and how Warren Buffett made compound interest work to his benefit, listen to the whole podcast episode!