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Stocks 102: Make Compound Interest Work for You

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1.
The Rule of 72 states that if you divide 72 by a given interest rate, you will learn how many years it will take for an investment to double. How long would it take for an investment with an interest rate of 4% to double?
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18 years. Dividing 72 by 4 gives you 18.
2.
To find out the rate of interest that you would need to double your investment in a certain number of years, _______.
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Divide 72 by the number of years. To find out the rate of interest you will need to double your investment in a certain amount of years, divide 72 by the number of years.
3.
The _______ you invest your money, the _______ compounding can work for you.
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Earlier / More. Compounding expands your money greatly over time.
4.
A tax-sheltered account always protects your investment interest from taxes, even when you withdraw from it.
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False. A tax-sheltered account lets interest grow within your account without taxes until it is withdrawn. Once it is withdrawn, it may be taxed.
5.
The amount of money you invest is called _______.
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Principal. The invested amount of money is called principal.