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Glossary entry · Money in motion
Compound interest
Definition
The mechanism by which an investment earns interest on both the original principal and on the interest accumulated in previous periods. Over decades it turns small contributions into surprisingly large balances.
Example
$200/month at 7% becomes ≈$525,000 after 40 years — most of it from interest, not contributions.
From the lessons
Lesson · 01
Compound interest
This term appears in a longer lesson, where the idea gets the proper treatment with examples and a working visualization.
Read the lesson →Related
Money in motion
Inflation
The rate at which the general price of things rises. Same money, less purchasing power.
Read →Interest rate
The percentage something pays — or costs — per year.
Read →Return
The gain (or loss) on an investment, usually expressed as a percentage per year.
Read →Time horizon
How many years until you actually need the money. Changes everything else.
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