Home › FINRA SIE › Finance › Saving and Investing Basics › With compound interest, what exactly earns inter…
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_
Related questions
Saving one dollar of daily coffee money, about $365 a year at 5%, grows to roughly what inWhich bodies insure savings products such as bank and credit union accounts?What can diversification honestly promise an investor?What are the payments called that a company may make to its shareholders?In the automobile company example, what did the bond offer investors?What relationship between risk and reward does the investing world often cite?What is the long-run danger of leaving all your money in a savings account?How much do some careful savers keep aside for emergencies like sudden unemployment?