Albert Einstein allegedly called compound interest the eighth wonder of the world. Whether he said it or not, the math justifies the reverence — and understanding it changes how you think about every financial decision you make.
The simplest explanation
Simple interest: earn interest on your principal only. Compound interest: earn interest on your principal AND on the interest you've already earned. Over long periods, the difference is staggering.
The power in numbers
📈 Compound growth calculator
The Rule of 72
Divide 72 by your annual return to estimate how long to double your money. At 7%: 72 ÷ 7 = ~10.3 years to double. At 10%: 7.2 years. At 6%: 12 years. This rule also applies to debt: credit card at 22% APR doubles your balance in 72 ÷ 22 = 3.3 years if you make no payments.
Compound interest working against you
Credit card at 22% APR on $5,000 balance, paying only minimums: takes 17 years to pay off and costs $8,900 in interest — nearly double the original balance. This is compound interest applied to your debt. Understanding this makes minimum payments obviously unacceptable.
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About the author
Enrique 'Kike' Faúndez is an Information Systems and Management Control Engineer from Universidad de Chile, with master’s degrees in Finance from Universidad de Chile and Industrial Engineering from Pontificia Universidad Católica de Chile. He has 15+ years of experience in regulated financial services across finance, operations, and digital product development. He founded CashControlly in Santiago, Chile, with the conviction that personal financial control should not be a privilege, but an accessible and well-designed tool.
- Master's in Finance, Universidad de Chile
- Master's in Industrial Engineering, Pontificia Universidad Católica de Chile
- Information Systems and Management Control Engineer, Universidad de Chile
- AI and ITIL certifications
- 15+ years in regulated financial services
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