Which option is an investment with compound interest?(1 point)

Responses

a mutual fund following the S&P 500
a mutual fund following the S&P 500

a rental property
a rental property

a checking account
a checking account

a savings account

1 answer

The option that is typically considered an investment with compound interest is:

a savings account

Savings accounts often pay interest on the deposited funds, and this interest can accumulate over time on both the initial principal and the previously earned interest, thus demonstrating the effects of compound interest.

While mutual funds can grow over time, their returns are not classified as compound interest in the same way that savings accounts or other interest-bearing accounts are. Rental properties can appreciate in value, but the income generated from them is not typically categorized as compound interest. Checking accounts generally do not provide interest or may provide very minimal interest that does not compound significantly.