Compound interest is calculated on both the initial principal and the accumulated interest from preceding periods. The formula is A = P(1 + r/n)^(nt). Time is the single most powerful factor: starting early allows exponential curve acceleration.
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Compound Interest
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Which factor has the greatest mathematical leverage on compound interest over a lifetime?
Frequently Asked Questions
A quick mental math shortcut: divide 72 by your annual interest rate to find the approximate number of years it takes for your investment to double (e.g. 72 / 8% = 9 years).
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