Compound Interest and the Rule of 72

When money is borrowed from a bank, you pay interest. Interest is a fee charged for borrowing the bank's money, it is a percentage charged on the principle amount for a period of usually a year. Put in simpler terms, compound interest can be looked as interest paid on the original principal and on the accumulated past interest, so it builds up on both counts. The common formula for compound interest is A=P(1+r)n, these variables may differ but all mean the same thing
P= the principal or initial amount borrowed or deposited
r= annual rate of interest
n= amount of years money is deposited or borrowed
A= total accumulated after n years, including interest

Using the compound interest calculator, if you were to save a $1 a day, approximately $365 p/y and ignoring the rule of leap years, from the age of 18 to 65, which is 47 years, at 8% interest, you will have $178,533.24.

The 'Rule of 72' a simplified way to determine how long an investment will take to double or halve, given a fixed annual rate of interest. Dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself. It is a great meantal math shortcut to estimate the effect of any growth rate, from quick financial calculations to population estimates. The 'Rule of 72' is most accurate when dealing with low rates of returns, as such, when the rates of return get higher or increase the estimate becomes less precise. The formula for the 'Rule of 72' is:
years to double= 72/ interest rate