Compound interest is the interest earned on an initial (principal) deposit in an account or hedge fund. If a bank's interest rate was 20% then a person could make 20% of their first deposit and then the next year 20% from the initial deposit + the first 20% earned.
An example would be: I put 500 smackaroos in an account. After one year I have 100 dollars on top of that. I am then left with 600 dollars in the bank. The next year I would have earned 120 leaving me with $720.00.
The Rule of 72 is an equation created by Albert Einstein to determine how long it would take an initial investment to double. By dividing an interest rate by 72, you will determine how long it will take for your initial deposit to double.
If I put 600 in the bank with a 5% interest rate, with the equation (72/5), it will take me 14.4 years for it to double to 1200 dollars.
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