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Select the word whose definition is given below.
Definition: Interest that is calculated on principal AND on any accrued interest.

Ask by Erickson Page. in the United States
Jan 23,2025

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The word is Compound Interest.

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The Deep Dive

The word you are looking for is “compound interest.” It’s like your money is a snowball rolling down a hill, gathering more snow (or interest) as it goes! The beauty of compound interest is that not only do you earn interest on your original amount (the principal), but you also earn interest on the interest that has already been added. This can lead to significant growth over time, especially with long-term investments!
To make the most of compound interest, start saving and investing early—time is your best friend. Many people mistakenly think they can’t start investing until they have a lot of money, but even small, regular contributions can snowball into a significant amount due to compounding. Just be wary of waiting too long, as missed opportunities can lead to smaller returns!

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