Compound Interest

Compound Interest in an Inflationary Economy: Why a 23% Deposit Against 61.4% Inflation Returns Minus 24%

Compound interest is not a financial trick but a mathematical property that works in both directions. At 20 percent, 100 million tomans becomes about 3,834 million over 20 years, while simple interest yields only 600 million. But inflation compounds too: at the 61.4 percent annual inflation of Tir 1405 (July 2026), the purchasing power of cash halves roughly every 14 months, and a 23 percent deposit delivers a real return near minus 24 percent.