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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 ?
Figure 17 compares the magnitude of shear thinning that each polymer imparted to the compound.
Showing high-performance custom compounds, including Thermylene chemically coupled, glass- and mineral-reinforced PP; Xyron modified PPE; Tenac acetal; and glass-reinforced ABS and SAN.
The first push to delve into the mystery of beer flavor occurred in the mid-1970s, when a team of flavor chemists from 40 countries identified 800 chemical compounds in the beverage.
The compounds used in this study were purchased from Sigma-Aldrich (Milwaukee, WI) and include chrysin (purity > 97%), phloretin (> 95%), kaempferol (> 95%), galangin (95%), naringenin (95%), genistein (98%), quercetin (99%), myricetin (95%), cantharidin (98%), luteolin (> 90%), baicalein (98%), daidzein (> 95%), emodin (> 90%), apigenin (> 90%), and diosmin (95%).
Landfill D did have trace levels of this compound in four out of five samples of well 2A, one out of four samples each for wells 2B and 3 and was not found in the upgradient well 1.
The compound tested in figure 11 tested satisfactory with the Mooney scorch test; however, the capillary scorch test did detect a problem.
9-million investment in the newly expanded Technology Innovation Center at Exton, which has 11,700 sq ft dedicated to R&D on lubricated, flame-retardant, conductive, and other specialty compounds.
In the course of our measurement effort, one interesting question was raised: Are rubber compounds softer at elevated temperatures?
One example of the application of a vein reduction compound was completed in a ductile iron foundry that produces automotive castings with a phenolic urethane coldbox binder.