Stock Market Investors » Glossary of Stock Terms » What is Compounding?

What is Compounding?

One of the tools you can benefit present in most investments is compounding. How it works? When you earn interest on your assets for a particular time period, you gain interest on the principal and the interest you have gained over the next time period. As a result, if you hold the investment over the long-term you will be amazed how far your assets can grow.

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