Compounding
Compounding adds earned returns to principal so future returns are calculated on a growing investment base.
Investment terms for compounding, effective rates, reinvestment assumptions, and doubling-time rules.
Compounding, Effective Rates, and Reinvestment terms explain how investment results are measured, compared, annualized, compounded, distributed, or translated into yield language.
Use this branch when the question depends on the exact return formula, time period, reinvestment assumption, fee treatment, tax treatment, or income-versus-price return split.
| Term | Use it for |
|---|---|
| Compounding | A measurement term for comparing investment income, growth, or total performance. |
| Effective Interest Rate | A measurement term for comparing investment income, growth, or total performance. |
| Effective Yield | A measurement term for comparing investment income, growth, or total performance. |
| Reinvestment Rate | A measurement term for comparing investment income, growth, or total performance. |
| Rule of 69.3 | A term page that narrows this branch to a specific investing concept, evidence source, or decision point. |
Check the formula, measurement period, compounding convention, cash-flow timing, reinvestment assumption, fees, taxes, currency, and whether the result is historical, expected, quoted, or realized.
This page is educational and does not recommend a specific investment strategy, security, tax treatment, or account choice.
Choose a subsection first. Deeper term pages live inside each subsection, which keeps large topic hubs readable.
Compounding adds earned returns to principal so future returns are calculated on a growing investment base.
The effective interest rate converts a stated rate into the actual annual rate after compounding frequency is included.
Effective yield measures investment income after compounding, making stated yields more comparable across payment schedules.
The reinvestment rate is the return assumed or earned when interim cash flows are put back to work in an investment strategy.
The Rule of 69.3 estimates how long an investment takes to double when growth is modeled with continuous compounding.