In order to understand the importance of obtaining higher interest rates on your savings, you must know another simple concept called the Rule of 72. This is a concept that shows the dramatic effect of time and compounding on your investments. It will help you figure out how fast your money will double in size. You simply take the interest rate you are receiving on an investment and divide it into the number 72.

As an example, let's say that you are earning a 3% rate of return on your investment. You will divide 72 by 3 and you will get 24. This tells you that it will take 24 years for your money to double. So, if you have a 6% interest rate (rate of return), your money will double every 12 years, etc. This concept should clearly illustrate to you why banks want to pay you 3% and take your money to earn 12%.

The following graph will give you a visual example of a $10,000 investment over a 24 year period.