DEFINITION of 'Compound'
The ability of an asset to generate earnings, which are then reinvested in order to generate their own earnings. In other words, compounding refers to generating earnings from previous earnings.
Also known as "compound interest".
INVESTOPEDIA EXPLAINS 'Compound'
Suppose you invest $10,000 into Cory's Tequila Company (ticker: CTC). The first year, the shares rises 20%. Your investment is now worth $12,000. Based on good performance, you hold the stock. In Year 2, the shares appreciate another 20%. Therefore, your $12,000 grows to $14,400. Rather than your shares appreciating an additional $2,000 (20%) like they did in the first year, they appreciate an additional $400, because the $2,000 you gained in the first year grew by 20% too. If you extrapolate the process out, the numbers can start to get very big as your previous earnings start to provide returns. In fact, $10,000 invested at 20% annually for 25 years would grow to nearly $1,000,000 (and that's without adding any money to the investment)!
The power of compounding was said to be deemed the eighth wonder of the world  or so the story goes  by Albert Einstein.
VIDEO

Compound Annual Growth Rate  CAGR
The yearoveryear growth rate of an investment over a specified ... 
Compound Interest
Interest calculated on the initial principal and also on the ... 
Interest
1. The charge for the privilege of borrowing money, typically ... 
Rule Of 72
A rule stating that in order to find the number of years required ... 
Compounding
The ability of an asset to generate earnings, which are then ... 
Market Value
The price an asset would fetch in the marketplace. Market value ...

Retirement
Top 4 Reasons To Save For Retirement Now
No more excuses. Make sure you are financially secure and independent for your golden years. 
Investing Basics
Understanding The Time Value Of Money
Find out why time really is money by learning to calculate present and future value. 
Investing Basics
Invest Without Stress
Have anxiety? Don't worry. We have your worryfree investing guide right here. 
Options & Futures
3 Simple Steps To Building Wealth
Getting richer is easier if you take it one step at a time. 
Insurance
Your Financial Life: From Stressful To StressFree
Find out how to get the ball rolling on your future financial security. Then sit back and watch things unfold. 
Options & Futures
Pick Stocks Like Peter Lynch
Learn the basic tenets that helped this famous investor earn his fortune. 
Investing Basics
Understanding Risk Averse Investing
Risk averse describes a low level of risk an investor is willing to accept on his investments. An investor who is risk averse prefers little risk and is willing to accept a lower return because ... 
Investing Basics
What is Profit?
Profit is a general term used to denote when earnings exceed the expenses incurred to generate those earnings. 
Investing Basics
What's a ClosedEnd Fund?
A closedend fund is a mutual fund that has an initial offering (IPO) of shares, and once those shares are sold, no additional shares are issued. Since it is a public offering, closedend funds ... 
Investing News
Millennial Investing Techniques Are Changing The Game
Millennials are taking advantage of social media and a variety of hightech tools to plow their wealth into investment vehicles of their choice.