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Compound Interest

"Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it". - Albert Einstein.

Compound interest (or compounding interest) is interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan, (Investopedia). For example, $5,000 at a rate of 5%, invested for 10 years would grow to $13,266.49.

Conversely, a credit card balance of $20,000 carried at an interest rate of 20% (compounded monthly) would result in total compound interest of $4,388 over one year or about $365 per month, (Investopedia).

The Rule of 72

How long will it take to double my money?

The 'Rule of 72' is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest. By 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.

From Investopedia: What is the 'Rule of 72'? 

Net Worth

Why is it Important?

The difference between your assets and liabilities is your net worth. This figure gives you a snapshot of your financial fitness at a point in time so you can make plans for future goals. Regular fit tests serve as a wake-up call when you go off track, allowing you to reestablish healthy habits for your long-term financial freedom and security.

Are YOU on track?

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