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Compound interest |
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Compound interestInterest paid on previously earned interest as well as on the principal.Compound interestThe interest paid on the principal balance in a mortgage and on the accrued and unpaid interest of the loan.Compound interestThe process by which interest earned on an investment is added back to the amount invested, so increasing the amount of 'principal' on which further interest will be earned in future years.Compounding is sometimes described as the miracle of investing. The fact is that if you reinvest income in your portfolio, you will end up with a much larger amount than if you spend the income as you go along because of the effect of compounding. But to allow compounding to work its magic, you have to start young.Albert Einstein, when asked what he considered to be mankind's greatest invention, replied 'Compound interest!'Similar MatchesCompoundingCompoundingThe 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. Compounding frequencyCompounding frequencyThe number of compounding periods in a year. For example, quarterly compounding has a compounding frequency of 4. Compound growth rateCompound growth rateSee: Compound Annual Growth Rate Compound tariffCompound tariffA tariff that combines both a specific and an ad valorem component. Compounding periodCompounding periodThe length of the time period that elapses before interest compounds (a quarter in the case of quarterly compounding). Further SuggestionsContinuous compoundingDiscrete compounding compound annual growth rate Compound Annual Growth Rate Compound option compound reversionary bonus Realized compound yield Simple compound growth method Compound Annual Return |
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