If you want to start investing but all the words sound like a different language, don't worry, I got you.

If you want to start investing but all the words sound like a different language, don't worry, I got you. Welcome back to the Investing Basics series. Let's chat compound interest. Compound interest is the interest you earn on both the original amount of money (principal) and on the interest that has already accumulated. In simple terms, it's "interest on interest." Let's use this chart as an example. Let's say you invested $1,000 into something that returned to 10% annually. At the end of year one, your investment would have grown to $1,100. Now in year two, you would earn another 10% annually, but instead of it only being earned on the $1,000 you put in, it's actually being earned on the $1,100 as long as you keep that full amount in your account and that continues on for every year that you continue to invest. So at the end of five years, you would have approximately $1,610 because your interest has been accumulating on not only your principal amount, but the interest that has been made year after year after year. And that is the beauty of compound interest. Let's say we left that $1,000 in the account making 10% annually for 35 years. At the end of 35 years, you would approximately have about $28,000. Now I know that doesn't seem like a lot of money for 35 years, but that is with you not having to add an additional cent. And this is the beauty of compound interest. And you will see at using this chart here that each year it is growing and it is growing because your money is making interest on top of the interest. And that is why they say time in the market is better than timing the market because whether you put a small amount in or a large amount in, the longer you give your money to grow is the more money you'll have in the long run. Now you know what compound interest is and you didn't need a man in a suit on Wall Street to explain it to you. The earlier you start is the easier it gets.