Compound Interest – when interest is added to the principal, so that, from that moment on, the interest that has been added also earns interest.
Do you know about the Rule of 72? It’s a simple way see the power of compound interest. Just divide 72 by the interest rate you’re earning on your savings (or the anticipated return on your investments) to see how long it will take to double your savings. Want to know more? Check out How Savings Work.