What is the meaning of compounding?

Answer 1

Compounding
The ability of an asset to generate earnings that are then reinvested and generate their own earnings.

Investopedia Says: Making interest on interest, the power of compounding interest is truly magical. At 15% interest for 25 years, $10,000 would grow to $330,000!

(There is also an aspect in criminal investigation, called Compounding a Felony, whereby someones actions make the crime more serious).

Answer 2

I'm guessing that this is about something like "compounding interest."

It means that the interest is based off of the prior period and keeps growing from the new base. It's better if I give an example.

Suppose you have $100 and 10% compounded interest.
Year 1 = $110 ($100 + $100*10%)
Year 2 = $121 ($110 + $110*10%)
Year 3 = $131.10 ($121 + $121*10%)
Year 4 = $146.41
Year 5 = $161.05

If it wasn't compounded, it would be worth less - only $150 in Year 5.

Hope that made sense

Answer 3

Adding the accumulated interest to the principal amount.

Example: Put $100 into an account that has 5% interest and compunds monthly. At the end of the month you multiply 100 time .05 and add it too 100. The result is $105. At the end of the next month multiply 105 times .05, etc.

The more the money compounds the better the return. Interest can compound yearly, monthly, weekly, daily, continously (e function), etc.

Answer 4

com·pound 1 (kŏm-pound, kəm-, kŏmpound′)
v. com·pound·ed, com·pound·ing, com·pounds

v.tr.
1. To combine so as to form a whole; mix.

2. To produce or create by combining two or more ingredients or parts: pharmacists compounding prescriptions.

3. To settle (a debt, for example) by agreeing on an amount less than the claim; adjust.

4. To compute (interest) on the principal and accrued interest.

5. To add to; increase: High winds compounded the difficulties of the firefighters.

v.intr.
1. To combine in or form a compound.

2. To come to terms; agree.


adj. (kŏmpound′, kŏm-pound, kəm-)
1. Consisting of two or more substances, ingredients, elements, or parts.

2. Botany Composed of more than one part.


n. (kŏmpound′)
1. A combination of two or more elements or parts. See Synonyms at mixture.

2. Linguistics A word that consists either of two or more elements that are independent words, such as loudspeaker, baby-sit, or high school, or of specially modified combining forms of words, such as Greek philosophia, from philo-, "loving," and sophia, "wisdom."

3. Chemistry A pure, macroscopically homogeneous substance consisting of atoms or ions of two or more different elements in definite proportions that cannot be separated by physical means. A compound usually has properties unlike those of its constituent elements.

4. Botany
a. A leaf whose blade is divided into two or more distinct leaflets.

b. A pistil composed of two or more united carpels.

Answer 5

The ability of an asset to generate earnings that are then reinvested and generate their own earnings.

Answer 6

When you put two things together.

Answer 7

adding too...like " he compunded his charges when he broke the law again"