Phantasm
Verified member
Compound interest is a way to make your money grow faster. It works by adding interest on top of the money you already have saved. That means that each time you get interest, it adds to the amount of money you have saved, and then when you get more interest, it adds to the new total.
Let's say you save $10 in a bank account that pays 5% compound interest each year. After one year, your $10 would become $10.50 because the bank added 5% of 10 dollars (which is 50 cents). Then after two years, your $10 would become $11.03 because now they are adding 5% of 10.50 dollars (which is 52 cents). And so on and so forth - every year your money grows a little bit more!
Compound interest can help people accumulate wealth over time because it allows them to earn more than just what they put in their savings account or investment account initially. The longer someone saves their money with compound interest, the bigger their savings will be!
It's important for you to understand how compound interest works so that they can start saving early and watch their money grow over time
Let's say you save $10 in a bank account that pays 5% compound interest each year. After one year, your $10 would become $10.50 because the bank added 5% of 10 dollars (which is 50 cents). Then after two years, your $10 would become $11.03 because now they are adding 5% of 10.50 dollars (which is 52 cents). And so on and so forth - every year your money grows a little bit more!
Compound interest can help people accumulate wealth over time because it allows them to earn more than just what they put in their savings account or investment account initially. The longer someone saves their money with compound interest, the bigger their savings will be!
It's important for you to understand how compound interest works so that they can start saving early and watch their money grow over time
