Experts at Kiplinger’s distill four important concepts that older kids need to understand in order to increase their financial literacy: Even small amounts of money when saved in a bank account earning only 2% interest will continually grow, because of compounding interest; when you obtain a 30-year loan to buy a house, you may have to pay less each month for principal and interest payments, while a 15-year loan will require higher monthly payments, but you pay less in interest; there is generally more risk associated with buying an individual stock than in buying a mutual fund, because the fund may be properly diversified; and when interest rates increase, bond prices decrease, because newer bonds may be issued with higher rates and will be more attractive to investors.