saving money vocabulary

chapter 3

emergency fund

save $500 in it

interest rate

the percentage of principal charged by the lender for the use of it’s money

accrued interest

the amount of interest charged on a debt but not yet collected; interest accumulates from the date a loan is issued

compound interest

interest paid on interest previously earned

principal

the initial amount of money invested or borrowed

compound growth

the average rate of growth for an investment over time; often expressed as an annual figure

rate of return

the measure of an investment’s profit or loss, usually expressed as a percentage of the initial investment

inflation

the persistent rise in the cost of goods and services over time

time value of money

earning potential of money