Compound Interest

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. This creates exponential growth over time.

Common compounding frequencies include daily, monthly, quarterly, and annually. More frequent compounding results in slightly higher returns.

The Rule of 72 estimates how long it takes to double your money. Divide 72 by the annual interest rate. For example, at 6% interest, your money doubles in approximately 12 years (72/6).