Compounding Advice

• 7 July 2019

• #1

T

tylerdurden2019

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Hi All,

Newbie here! Looking for some advice on compounding when it comes to share profits and returns. Is this simply a case of reinvesting the profits into winning stocks or am I missing something here?

Given the banks have poor interest rates assuming compounding on the stock market refers to reinvesting any profits made?

Thanks

 

• 7 July 2019

• #2

tech/a

No Ordinary Duck

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Yes correct
Also any dividends

 

• 7 July 2019

• #3

Zaxon

The voice of reason

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tylerdurden2019 said:

Looking for some advice on compounding when it comes to share profits and returns. Is this simply a case of reinvesting the profits into winning stocks or am I missing something here?

Click to expand...

Compounding simply means earning interest on interest. Shares tend to compound inside themselves, so even buy-and-holding shares is a compounding technique. Definitely reinvesting dividends. But not necessarily in the same company. I collect my dividend money, and it gets added to the next share I'm buying.