← Money Words
Compound interest
When your interest starts earning interest of its own.
Three ways to explain it
Hatchlings · Ages 5–6
Your money grows a little. Then the bit that grew starts growing too.
Fledglings · Ages 7–8
Interest on your interest. Your money earns money, then that money earns money — like a snowball rolling downhill.
High Flyers · Ages 9–10
Interest worked out on your original amount plus all the interest already added. It’s why growth crawls at first and then speeds up, and why when you start matters more than how much you start with.
Where to go next
Read the whole topic: Growing It.