alleryStart learning →With compound interest, what exactly earns interest?
ABoth your savings and the interest they earn
BOnly the money you originally deposited
COnly the interest, never the deposit
DWhatever exceeds the insured limit only
Answer & Solution
Correct answer: A. Both your savings and the interest they earn
1. Compounding is the growth engine of saving.
2. With compound interest you earn interest on the money you save and on the interest that money earns.
3. Over time even a small amount saved can add up to big money.
_Source: "Saving and Investing: A Roadmap to Your Financial Security" (US SEC, public domain), section Investing_
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