Compound Interest

Compound Interest is basically the interest added to the interest as well as the principle in a savings account or loan. Compund interest is a very good thing because you get "free money" without having to work for it. It keeps your money and gives you a little extra. For example if you have $1,000 and you have a 20% interest, which you will never find, by the end of the year you will have $1,200. I used a Compound Interest Calculator and I found out that if I put $500 in a savings account at 2% interest a year for 10 years without adding any of my own money to it, my balance would be $609.50, which means that my Compound Interest would be $109.50 for the ten years that my money was in the bank. That is over 100 "free dollars"! I think that the great thing about Compound Interest that inspired Einstein to say "The most powerful force in the universe is compound interest", is the fact that you don't have to do anything to help your money grow.
The Rule of 72 is: A rule stating that in order to find the number of years required to double your money at a given interest rate, you must divide the compound return (interest) into 72. The result is the approximate number of years that it will take for your investment to double. An example of Compound Interest would be if you have $2,000 in your savings account. You have a 4% interest each year. You would divide 72 by 4% to get 18, which would be the amount of years it will take to double your money.