Question

savings vs. investing key terms
1 vocab word definition
1 inflation
2 earned interest
c compound interest
rule of 72
5 us savings bond

Explanation:

1. Inflation: A sustained increase in the general price level of goods and services in an economy over time, reducing purchasing power.
2. Earned Interest: The amount of money earned on an initial sum of money (principal) deposited in an interest-bearing account or investment, calculated only on the original principal.
3. Compound Interest: Interest calculated on the initial principal and also on the accumulated interest from previous periods, allowing earnings to grow exponentially.
4. Rule of 72: A quick formula to estimate the number of years required to double an investment at a given annual fixed interest rate, calculated by dividing 72 by the annual interest rate.
5. US Savings Bond: A low-risk, government-backed debt security issued by the U.S. Treasury, designed to help individuals save money while earning interest, with tax advantages for certain uses.

Answer:

VOCAB WORD	DEFINITION
Earned Interest	Interest earned only on the original principal amount.
Compound Interest	Interest on principal plus accumulated past interest.
Rule of 72	Formula: $\frac{72}{\text{annual interest rate}}$ to estimate doubling time for investments.
US Savings Bond	Low-risk U.S. Treasury security for savings with tax benefits.