Michael Boyle is an experienced financial professional with more than 10 years working with financial planning, derivatives, equities, fixed income, project management, and analytics. Suzanne is a ...

In investing, compounding involves reinvesting the earnings an asset generates so they produce additional gains over time. Compounding is a powerful investment tool because it not only provides gains ...

Once a principal balance earns interest, that interest becomes a part of the principal and continues to earn more interest—that is the magic of compounding. What Is Compound Interest? How Does It Work ...

Elvis Picardo is a regular contributor to Investopedia and has 25+ years of experience as a portfolio manager with diverse capital markets experience. Suzanne is a content marketer, writer, and ...

Compound interest is a favorable method of compensating lenders and depositors wherein interest is periodically credited to the principal, and subsequent interest is paid on the increasing balance.