How it is calculated
- Every month: amount = amount × (1 + annual rate / 12) + the contribution.
- The rule of 72: 72 ÷ the annual percentage ≈ years to double (at 6% — about 12 years).
The mathematics is the same in every country. Knowledge, not investment advice: returns on investments are not guaranteed, and inflation reduces the real value. Tax on interest differs between countries.
The terms in the Glossary
- Compound interest (compounding and capitalisation) — compound interest is interest charged not only on the starting amount but also on interest already added — which is why
- Interest — interest is the price paid for using someone else's money — what a borrower pays a lender, or a bank pays a saver, for t
- Rule of 72 — the rule of 72 is a quick approximate way to work out how many years it takes for a sum to double: divide 72 by the annu
- Inflation — Inflation is the general rise in prices over time, so the same amount of money buys less.
- Real and nominal interest rate — the nominal interest rate is the percentage written in the contract; the real interest rate is that percentage after inf