You can stretch your investment dollars by obtaining compound interest on them. This option grows your money (or depletes it, in the case of debt) much faster than simple interest. The more often the bank or investment firms deposit their interest into your account, the better for you.

Compound interest training teaches a formula for proper computation. P represents your principal, r is the annual interest rate (as a decimal), t is the time in years, n is the number of times the interest compounds per year and A is the total amount after time passes. The formula is A=P(1+r/t) to the nt power. Figure compound interest and use it to your advantage with the following steps:

1. Use online calculators to figure out compound interest.

2. Learn to calculate compound interest quickly using the rule of 72.

3. Put compounding interest to work for you.

Action Steps
The best contacts and resources to help you get it done

Get compound interest information using online calculators

You can get help with compound interest online. With basic figures for the principal, interest rate or other items, you can instantly obtain the compounding interest for your investment. Some of these websites display your compounding interest results accompanies by graphs and charts.

I recommend: The University of Utah's website for its "Introduction to Scientific Programming" class boasts a simulator to compare interest rates at differing amounts and intervals. The interest calculator on JKE Computer Solutions' website computes the information and graphs it for the consumer to compare quarterly, semiannually and annually accruing compounding interest.

Use the rule of 72 to estimate compound interest quickly

A standard compound interest formula reveals how long it will take to double your money. You can compute interest by using the rule of 72, which says to divide the interest rate into the number 72. The result tells you how long it will take to double your funds. For example, if you invest at 8%, you'll double your money in approximately 9 years.

I recommend: Investopedia shows rates of return for several interest rates and compares the actual figures compared to the rule of 72. Moneychimp shows the math, explaining how the rule of 72 works. This site also compares the exact figures to the rule of 72 estimates.

Work with a compound interest consultant online to put your money to work

Compound interest can be a double-edge sword, working against you in the case of credit cards or for you in investments, so get expert compound interest advice. Even small amounts you pay extra on credit cards or mortgages can shave years off your loans.

I recommend: Use CCH Incorporated as a consultant to calculate compound interest on annuities, bonds and even mortgages. A variety of calculators can help you compare different types of loans and investment strategies such as mortgages, credit cards and climbing out of debt as well as IRAs and bonds. There are also business tools such as break-even analysis and figuring profit margins. Bankrate has a variety of calculators for compound interest, cost of living estimator, debt-to-assets ratio for business and many others.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Some programs go a step further with compound interest to discount the value of money based on inflation, reducing the future value of your money based on historical data.