Compound interest
Interest you earn on your interest. Over time, it makes savings grow faster and faster.
Practice it
Learn the bigger idea
- Investing, explainedHow money grows on its own over time, why starting at 16 beats starting at 36, and the simple tools most people use.
- Banking and saving, explainedWhere to keep your money, how to avoid fees, and how to make it earn a little while it sits.
Related words
- Diversification
- Spreading your money across many different investments so one bad one can't sink you.
- Index fund
- A fund that buys every stock in an index, like the S&P 500, so you own a small piece of all of those companies. Fees are usually low.
- ETF
- Exchange-traded fund: a fund that holds many investments and trades on the stock market like a single stock.
- Mutual fund
- A fund that pools money from many investors to buy stocks, bonds or both.
- 401(k)
- A retirement savings plan you get through a job. Money usually goes in before taxes, and some employers add extra money, called a match.
- Roth IRA
- A retirement account you fund with money you've already paid taxes on. It can grow and come out tax-free in retirement if you follow the rules. You need income from work to put money in.
Test yourself in Word sprint · All money words
Tomorrow’s bell-ringer in your inbox before first period: slides, a quiz and a worksheet. Free.