Continuous Compounding

AAA

DEFINITION of 'Continuous Compounding'

The process of earning interest on top of interest. The interest is earned constantly, and immediately begins earning interest on itself.

INVESTOPEDIA EXPLAINS 'Continuous Compounding'

This is an extreme case of compounding, most interest is compounded on a monthly, quarterly, or semiannual basis.

VIDEO

Loading the player...
RELATED TERMS
  1. Compound Interest

    Interest calculated on the initial principal and also on the ...
  2. Interest

    1. The charge for the privilege of borrowing money, typically ...
  3. Compounding

    The ability of an asset to generate earnings, which are then ...
  4. Endowment Effect

    The endowment effect describes a circumstance in which an individual ...
  5. Self-enhancement

    The self-enhancing bias is the tendency for individuals take ...
  6. Gamification

    Gamification describes the incentivization of people's engagement ...
Related Articles
  1. Markets

    Using Historical Volatility To Gauge Future Risk

    Use these calculations to uncover the risk involved in your investments.
  2. Bonds & Fixed Income

    Accelerating Returns With Continuous Compounding

    Investopedia explains the natural log and exponential functions used to calculate this value.
  3. Retirement

    Understanding Credit Card Interest

    Paying these rates can impact your disposable income and your investment returns.
  4. Retirement

    Transfer Retirement Savings When You Change Jobs

    Half of Americans lose their nest eggs when they switch careers. Learn why you should avoid this trap.
  5. 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 ...
  6. Investing Basics

    What is Profit?

    Profit is a general term used to denote when earnings exceed the expenses incurred to generate those earnings.
  7. Investing Basics

    What's a Closed-End Fund?

    A closed-end 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, closed-end funds ...
  8. Savings

    The Top 4 Discount Travel Websites

    Planning a trip? Find out how to save on airfare, hotels, rental cars and more.
  9. Savings

    Mortgage Faceoff: Bank of America Vs. Wells Fargo

    Which bank offers the better mortgage deal? Here's how they compare on two popular types of mortgage.
  10. Investing News

    Millennial Investing Techniques Are Changing The Game

    Millennials are taking advantage of social media and a variety of high-tech tools to plow their wealth into investment vehicles of their choice.

You May Also Like

Hot Definitions
  1. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  2. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  3. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  4. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  5. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  6. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
Trading Center