A DRIP automatically takes the dividends that you earn each year and buys more shares of the Company for you. Plus, you don't have to pay a fee to make the new purchase. Some companies even offer a discount off the price of the stock if you sign up for dividend reinvestment. But keep in mind, not all companies pay dividends to shareholders. Stocks are considered equity.
Inflation is the growth in the cost of products and services, also called the cost of living.
This means that the power of your dollar to buy things decreases over time. One example of inflation is hearing your grandparents claim that a cup of coffee only cost a nickle when they were young. Keep in mind, in order to save money that has value to buy things in the future, you want to invest your money where the interest rate is higher than the rate of inflation. Interest is the additional money you earn when you lend your money to others for a period of time. If you put money into a savings account at a bank, or into a government or corporate bond, you will be given a certain interest rate.