About 5 minutes
 
 
It’s often said the Albert Einstein once described compound interest as “the eighth wonder of the world.” Well, he probably never actually did say that – the man came up with E=MC² for crying out loud! But compound interest is an incredible financial force and something we all need to understand. So let’s check it out.
 

Here’s what we cover in this guide

An intro to interest rates
The power of compounding
Visualizing interest-on-interest
The Rule of 72
Taking advantage of time
 

A brief introduction to interest rates

Before we get to the compounding, let’s take a half step back and talk about interest rates.
 
Interest rates are an essential part of our financial system. They influence almost everything that happens in the world of money, either directly or indirectly. That’s because they’ll determine the cost of borrowing money and also the growth rate of your savings and investments.