Glossary term

Compounding

In plain English

Earnings on your earnings. Money grows faster over time because the growth itself starts earning more growth.

Example

$1,000 at 8%/year becomes $2,159 after 10 years — not $1,800.

Educational only. TrustFirst is not a registered investment adviser and does not provide personalized investment advice. This definition is written to teach the concept; it is not a recommendation to take any specific action.