Compound Growth
When your money grows, future growth can happen on the money you originally invested and on some of the growth that came before.
Growth on growth
If the next round of growth is calculated on $110 rather than the original $100, the next increase can be a little larger.
The pile keeps growing
Each new round starts with the larger pile from before. Real investments don't grow by a fixed amount every period like this — it's just a simple way to see the idea.
Real investment returns can rise, fall, be negative, or vary significantly. Investments don't reliably grow the same amount every year.
Compounding vs interest
Compound growth can happen with savings interest — see the chart of one family's Save jar growing month by month — but the broader idea can also apply to investment returns being reinvested — growth building on growth, wherever it comes from.
The formula behind it
Small amount + time + reinvested growth = potentially much larger amount. We won't promise a particular future value — but this combination is why time is such a powerful part of investing.
10% growth, two years running
This is an excellent opportunity to demonstrate why starting early can matter. Focus on time and consistency rather than chasing high returns.
Growing Money complete!
- Investing means putting money into assets that may grow or produce income.
- Investments can lose value.
- Shares represent ownership in companies.
- Funds can spread investments across many assets.
- Risk and reward are connected.
- Long-term investing gives money more time.
- Compound growth means growth can build on previous growth.
Next up: The Bigger Financial World — some of the bigger financial ideas you'll encounter as you grow up.