What does 10 year compound on your investment returns mean?

Answer 1

compounding is the earning of interest on interest. If you are earning 5% on $1 then at the end of year 1 you would have
$1(1.05)^1
At the end of year 2, $1(1.05)^2

At the end of year 3, $1(1.05)^3

& so forth.

Answer 2

Compounding means that instead of being paid interest, the amount of interest you would get is kept in the investment -- and earns you more interest in the future.

For example, if you invested $100 at 10% paid yearly -- then after one year you get 10% of $100 in interset, giving you a total of $110. But the next year, you get 10% of the full $110 -- giving you another $11 -- for $121. After 10 years, you would have 100*(1.10)^10

Answer 3

Lets say you have $1,000 and get 10% interest. At the end of year 1 you get 1,000x1.1= 1,100. At the end of year of 2 you get 1,100 x 1.1=1,210. When you keep growing all your money like this for 10 years, it is called getting 10 year compound interest on your investment of 1,000.

Mathematically it is expressed as $1,000 x 1.1^10

Hope that helps

Answer 4

doubling of your investment