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The process of accumulating the time value of money forward in time. For example, interest earned in one period earns additional interest during each subsequent time period.


The process of earning interest on a loan or other fixed-income instrument where the interest can itself earn interest. That is, interest previously calculated is included in the calculation of future interest. For example, suppose someone had the same certificate of deposit for $1000 that pays 3%, compounding each month. The interest paid is $30 in the first month (3% of $1,000), $30.90 in the second month (3% of $1,030), and so forth. In this situation, the more frequently interest is compounded, the higher the yield will be on the instrument. See also: Amortization, Time value of money, Simple interest.


Compounding occurs when your investment earnings or savings account interest is added to your principal, forming a larger base on which future earnings may accumulate.

As your investment base gets larger, it has the potential to grow faster. And the longer your money is invested, the more you stand to gain from compounding.

For example, if you invested $10,000 earning 8% annually and reinvested all your earnings, you'd have $21,589 in your account after 10 years.

If instead of reinvesting you withdrew the earnings each year, you would have collected $800 a year, or $8,000 over the 10 years. The $3,589 difference is the benefit of 10 years of compound growth.

References in periodicals archive ?
Product line and development efforts, initially are focused on providing an optimized, more efficient alternatives for the preparation of the nearly 8 million currently compounded prescriptions, by offering FIRST([TM]) - Unit-of-Use Prescription Compounding Kits.
Distributes prime, virgin, and compounded materials, including polyolefins, styrenics, and engineered thermoplastics.
As previously reported, the Company's Pulmo-Dose pharmacy in Murray, Kentucky dispenses compounded preparations of drug products that are not commercially available, based upon a patient's individual need and at a physician's specific request.
The lawsuits allege that these compounding pharmacies were promoting their compounded ALA for use in DUSA's patented therapies and were therefore inducing physicians to infringe DUSA's patents.
If a fully compounded formulation were to be mixed the entire mixing was done in the mixer.
Type I coagents compounded in the test formulations were trimethylol-propane trimethacrylate (TMA) and a scorch retarded trimethylolpropane trimethacrylate (SRTMA).
The big physical difference between reactor-produced TPOs and compounded TPOs is in the size of the rubber domains.
Traditionally, rubber materials have been compounded in batch equipment that imparts shear stress for mixing through a variety of mechanisms.
3M is showing a new PBT compounded with glass microspheres for low density.
y viscometer-Mooney relaxation measurements on raw and compounded rubber stocks," H.
SFR-100 has thus re-emerged as a halogen-free additive for polyolefins that not only improves flame retardancy but, when properly compounded, provides other benefits:
A series of E-P polymers having a range of 5-ethylidene-2-norbornene (ENB) concentration were compounded with 29 volume percent carbon black and a low sulfur cure systems.