What is 4% annual rate?

Imagine you have 100 jelly beans, and every year, you get 4 more jelly beans as a treat, that’s what a 4% annual rate means!

If you start with 100 jelly beans:

• After one year, you'll have 104 jelly beans.
• After two years, you’ll get another 4%, so now you'll have 108 jelly beans (because 4% of 104 is about 4.16).
• Every year, your pile of jelly beans gets a little bigger, just like how money grows when it earns interest.

Think of your piggy bank as having a 4% annual rate. If you save $100 in it, next year you’ll have about $104, and every year after that, it'll keep growing by 4%. It's like getting free jelly beans (or extra cash) without doing anything!

So whether it’s jelly beans or money, a 4% annual rate means your total gets bigger by 4% each year. No magic, just steady, friendly growth!