The correct statement is C. Compound interest allows you to earn interest not only on the amount you have saved but also on the interest you've already earned.
Compound interest is the interest on a loan or deposit that is calculated based on both the initial principal and the accumulated interest from previous periods. This means that you earn interest not only on your initial investment but also on the interest that has been added to the principal over time. This compounding effect can lead to the exponential growth of your savings or debt over time.
This compounding effect becomes more significant over time, and it illustrates the power of compound interest in growing savings or, conversely, increasing the amount of debt over time. It's a key concept in finance and investing
Correct Question:
Which of the following statements is true about compound interest?
A. compound interest is difficult to calculate, so those who use it earn higher profits
B. compound interest means you have a fundamental manager who is compounding your returns without charging a fee
C. compound interest allows you to earn interest not only on the amount you have saved but also on the interest you've already earned
D. compound interest directly impacts how much you will be charged in fees