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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 3 demonstrates die swell from extrusion of a rubber compound.
BI Chemicals and Almac become the third and fourth contract manufacturing organizations respectively to achieve Potent Compound Safety Certification by SafeBridge.
At least eight new developments are pushing specialty thermoplastic compounds into higher levels of performance and opening up new areas of potential applications.
Carr is now comparing how well the new compounds and statin drugs lower cholesterol in lab animals.
Those compounds in the 45,000 compound library that were not found in any samples are not listed.
Figure 20 illustrates the effects of increasing carbon black loading on shear thinning of the rubber compound.
Provides toll-compounding services and proprietary engineered compounds with an emphasis on nylon, PP, polyester, PC, and silicone concentrates.
While too much of this compound would add an unpleasant, astringent character to the beer, its detection concentration is 150 times that of trans-2-nonenal, says Gustav Hambraeus of the Carlsberg Research Center in Copenhagen.
2001), and plasma concentrations of this compound range from 20 to 200 nM in healthy humans (Dzeletovic et al.
Exotic Feline Breeding Compound staffers said feeding the new arrivals is stretching the nonprofit center's finances.
The most significant result of the field study is that no detectable (quantifiable) concentrations of any organic compound in the 45,000 compound library searched was found in any well at any of the four landfills studied.
The compound is a mixture of procaine, which is commonly known as Novocain, and selegiline, a drug approved by the Food and Drug Administration for the treatment of Parkinson's disease.