SESKStuff Everyone Should Know
SESK: Stuff Everyone Should Know · sesk.info/teen-invest-compound-def

Compound interest is interest paid on what?

On your principal and on interest already earned.

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  1. The principal only
  2. The principal and the accumulated interest ✔
  3. The bank's profits

Why: With compound interest you earn interest on your savings and on the interest those savings earned. Over time that snowballs.

Huh, didn't know that: Investor.gov calls this effect the power of compounding.

The dad joke
Why should you invest all your money in yeast? Because it makes your dough rise.
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References

Answer: The principal and the accumulated interest. With compound interest you earn interest on your savings and on the interest those savings earned. Over time that snowballs.

  1. Investor.gov glossary: Compound interest www.investor.gov/introduction-investing/investing-basics/glossary/compound-interest
    Interest paid on principal and on accumulated interest.
    Checked 2026-10-10.

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