Money Tips Daily By Charles Kelly, Former Ifa And Author Of Yes, Money Can Buy You Happiness.

Albert Einstein once said that compound interest was the most powerful force on earth. What is compound interest? In simple terms, compound interest is the effect of interest being earned, paid or on interest. If you had £100 in the bank earning 7% interest per annum at the end of the year you would have £107. In year two, you are earning 7% on £105, not £100. The Rule of 72 If you did not touch the interest or savings and the interest continued at 7% per annum how long would it be before your money doubled? The answer is just over 10 years. Look at it from another point of you, if you have a credit card debts rolling up at 20% per annum, how long would it be before your debt doubled in size? The answer is just over three years. However, let’s assume you are paying the minimum 2% off of your debt balance, and for the sake of this exercise we assume that effect is that you will be paying 18% on the debt. It would still only take four years before your debt has doubled in size. Furthermore, just paying the mini