Compounding in Stock Investing

Compounding can be referred to as the process whereby an asset’s earnings, generated from other capital interests, are reinvested to generate more interest or gains over time. Basically, your investment generates interests and those interests generate interests of their own. Some people would like to think of compound interest as your money making money on your behalf. A common example is seen in holding single stock over a long period of time with constant reinvestment of other capital gains, thereby, creating a compounding effect. Many assets tend to grow rapidly over time with compounding. The trick is, the longer you…
Source: Compounding in Stock Investing

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