Financial Dictionary 

Thousands of investors have told us they are confused by the investment jargon that is used by financial advisors. We also know some terms, that investors don't understand, are used by advisors as sales ploys. They establish themselves as experts when they define a term you may not understand. 

There is an alternative. We have defined more than 1,500 commonly used financial terms. Look-up a definition by entering the term in the search engine or using the alphabetical search service.

Definition of 'Compound Interest'

Interest that is earned on principal plus the interest that is earned on previous interest payments. For example, if $100 is deposited in an account at 10%, the investor will have $110 at the end of the first year and $121 at the end of the second year. The extra $1 is the compound interest that was earned on the $10 of interest from year one.

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