ELI5: Explain Like I'm 5

compound interest

Compound interest is when you get interest on the money you already have.

Let's say your parents give you 10 dollars. You can put it in a bank and the bank will pay you interest. That means you get a bit more money just for having it in the bank. The more money you have in the bank, the more money you get from the bank.

Compound interest is like adding a bit of extra money every time you get paid. Every time you get paid, you get a bit more money from the bank. In the end, you have more money than you had when you started.