Compounding Works Like Magic

The Rule of 72

Here's another way to look at it: $100 plus 10 years at 7.2% interest equals $200 dollars

Keep rolling!

Do this using the Rule of 72 to estimate how time and interest work to double any amount of money.

Important: The Rule of 72 assumes you leave the money in an account without taking away from it or adding to it. It isn't exact, but it's close enough. Here's how it works:

Divide 72 by the interest rate you expect to earn. This will show the number of years it will take to double your money. For example, if your savings account earns 3% interest, use this formula this way:

The magical number	Divided by the interest rate	Equals the number of years
72	3%	24

Or, divide 72 by the number of years in which you want your money to double to figure the interest rate you'll need. For example, if you want your money to double in 10 years, use the formula this way to learn what interest rate you'll need to earn:

The magical number	Divided by the number of years	Equals the interest rate
72	10	7.2%

Interest rates make a difference

Check with your credit union to find the best interest rate.

You probably won't find a credit union giving 7.2% interest on a simple savings account. Interest rates are pretty low right now.

But that doesn't mean you have to settle for the lowest rate.

Ask your credit union if they have a builder certificate. You can start an account like this with as little as $1, and you can add to it regularly.

The interest rate on a builder certificate is a little better than that of an ordinary savings account.

Or try this:

Invest small amounts weekly into your credit union builder certificate. When you accumulate enough, ask your credit union to show you how to transfer your money to an account that gives more interest.

More easy ways to save.

Start today!

Don't wait for a magic trick to work. You can put your money to work now in your credit union savings account.

Here's one way to save: pack one or two lunches a week, instead of eating out every day. Check the sidebar at the right for more easy ways to save.

True or False: Benjamin Franklin proposed the idea of Daylight Savings Time to give hard-working Americans more time to have fun during summer months. Click Ben's head for the answer.

FALSE: He invented Daylight Saving Time to provide better opportunities to people to do productive work during the summer months.

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