Compound Interest And The Rule Of 72

Compound interest refers to the fact that whenever interest is calculated, it is based not only on the original principal, but also on any unpaid interest that has been added to the principal. The more frequently interest is compounded.

The Rule of 72

The Rule of 72 is a very simple way of illustrating the growth potential of compound interest.

However, the above Rule of 72 merely gives an approximation of the time needed to retain an investment before it doubles in value.