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Understanding the Basics of Personal Finance: Compound Interest Learn the basics of compound interest.

By Phil Town

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Personal finance is important. Starting a smart personal finance plan as soon as possible can mean the difference between retiring early, sending your kids to their dream schools and more. But, before you can save big bucks, you need to know the basics of personal finance. In this video, Entrepreneur Network partner Phil Town helps you by explaining how compound interest -- one of the most important aspects of personal finance -- works.

When interest is compounded, rather than paid linearly, the overall size of the investment grows exponentially faster. The effects are harder to see in the early years, but eventually, they become quite pronounced.

Click play to learn more.

Related: How to Fund Your College Education by Investing

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Phil Town is an Investment Advisor, Hedge Fund Manager, 2x New York Times Best-Selling Author of Rule #1 & Payback Time, and Ex-Grand Canyon River Rafting Guide. Rule #1 Investing is Warren Buffett style investing, teaching you how to buy businesses on sale, with little risk and 15 percent returns. In fact, Rule #1 investing is practically immune to the ups and downs of the stock market.

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