Finance
What Is Principal?
Principal is the original amount of money borrowed, invested or saved, before any interest or returns are added.
Principal is the base amount of money in a financial transaction: the sum you borrow on a loan, deposit in savings, or invest in an asset. Interest and returns are always calculated as a percentage of the outstanding principal.
On loans, payments split between interest and principal reduction — only the principal portion actually shrinks the debt. In investing, "preserving principal" means protecting the original stake from losses.