Compound interest
Compounding means earning returns on your returns. Over long periods it becomes very powerful.
The rule of 72
- Divide 72 by the yearly return to estimate how many years it takes to double.
- At 8% a year: 72 ÷ 8 = about 9 years to double.
- It works against you too: debt at 24% a year doubles in about 3 years.
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Questions people ask
What is diversification in simple words?
Not keeping all your eggs in one basket: spreading money so one bad outcome cannot ruin you.
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Educational content only, not financial, investment or tax advice. Trading forex and CFDs carries a high risk of losing money. Look up any term in the trading glossary.