Question 1

What is compound interest?

Accepted Answer

Compound interest means you earn interest on both your original principal and the interest you have already accumulated. This creates exponential growth over time.

Question 2

How often is interest compounded?

Accepted Answer

Interest can be compounded annually, quarterly, monthly, or daily. The more frequently it compounds, the more you earn.

Question 3

What is the Rule of 72?

Accepted Answer

The Rule of 72 is a quick way to estimate how long it takes to double your money: divide 72 by the annual interest rate. For example, at 6% interest, your money doubles in about 12 years.

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