Compound interest is a return investors realize when interest is both earned on the original principal and the prior interest earned. For example, the bank compounds your interest once a year. You are currently earning five percent on your original principal of $1,000. In year one, your interest earned is $50. Your principal has now grown to $1,050. In year two the interest remains at five percent. At the end of year two, the principal now increases by $52.50.
Related Articles:
- A High School Educator’s Experience Co-teaching a Remote College Course
- Six Money Moves for Your FutureKWHS guest columnist Eric Watson, financial writer for Money Crashers Personal Finance who advises young people on career development, retirement planning and smart money management, offers suggestions to boost your future financial health.
- 10 Terms New Investors Should Know
- Your Money and the 40-hour WorkweekHigh school students everywhere are donning their caps and gowns this week and next to gather their diplomas and enter the next phase of life. In the fall, many will head to higher education. Still others will go straight into the workforce. For those students entering full-time employment -- possibly for the first time -- KWHS has compiled a primer to help you navigate the financial decisions that come with a 40-hour (or more) workweek.
- Educator Toolkit: Financial Literacy