Compound interest

With simple interest, $10,000 at 7% earns $700 every year. With compound interest, year two earns 7% on $10,700, year three on $11,449, and so on. After 30 years the simple-interest balance is $31,000; the compounding balance is about $76,000.

The "rule of 72" is a quick estimate: divide 72 by the annual return to get the years it takes money to double. At 7%, that's a little over 10 years.

Compounding works against you on debt. Credit card balances compound daily, which is why a balance that's only paid down slowly can take years to clear.