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Finance Dictionary and Glossary of Investment Terms
Compounding
Definition 1.
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.
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Definition 2.
The ability of an asset to generate earnings that are then reinvested and generate their own earnings.
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Definition 3.
A process whereby the value of an investment increases exponentially over time due to compound interest.
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