Thursday, March 15, 2007

Compound Interest and the rule of 72

Compound Interest is when the amount of money you deposit or invest in a bank or institution gains interest. However you do not touch the money and the interest that was collected is then in turn calculated and increases the next interest amount. The rule of 72 is basically a formula that can tell you how long it would take to get a certain amount you are striving for, what percentage of interest you would need if you had a time limit and what is your outcome money when you calculate the interest rate and the time. Einstein said "The most powerful force in the universe is compound interest" the reason why I believe that Einstein chose to say that it is the most powerful force in the universe is because in general, if you have money your powerful. That is why he believed that compound interest is powerful because you leave your money alone and don't do anything and you gain money which is considered power in any language.

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