Compound interest is interest earned on previously accumulated interest as well as the principal. Compound interest is very good for saving and earning money because you accumulate "free" money. Compound interest keeps the money that you originally invested plus adds the extra or the interest money. An example of this is if you had $2000 in the bank and added $500 every year for 10 years with 5% annual interest (which is very very rare), you will have accumulated $9,800.!
The Rule of 72 is a rule that shows how long it will take to double the money you have invested. The rule is to divide the interest rate by 72 and the answer you get will be the number of years it will take to double the money you have invested. Example if you have $5000 invested with a 5% annual interest, it would take 14.4 years for your money to double (72/5.)
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