3 ms·

You are both right. What is compounding? It is when you add the gains, year by year.

• yxhuvud 1y ago
  The gains are multiplied though, no?
  • adastra22 1y ago
    In the vocabulary of finance you don't multiply in gains, you add them. It probably historically derives from dividends being added. At the transactional level you never actually multiply money, after all (unless you're a bank).
    • TheFuzzball 1y ago
      What is multiplication if not adding over time?
    • paulsutter 1y ago
      Everyone is right! It’s a multiply-accumulate (accumulate of course a synonym for add)
  • deleted 1y ago
    [deleted]