Compound Interest

 

Compound interest can be thought of as “interest on interest,” and will make a deposit or loan grow at a faster rate than simple interest, which is interest calculated only on the principal amount. Over time, even a small amount saved can add up to big money. Your money can produce income when your money works for you.

 

 

 

Rule of 72

The Rule of 72 is a mathematical formula used to estimate the amount of time it would take for an amount to double using Compound Interest.  The Rule of 72 formula is to divide the interest % into 72 to estimate the number of years to double your principal. 

 

This example below shows how compound interest can work in your favor by doubling your money after a certain number of years depending on the interest rate you are earning on your principal.