👉 Compounding is a mathematical operation in finance that involves multiplying an investment by a factor every time it is reinvested. This means that instead of receiving one dollar at the end of each period, you receive two dollars or more, depending on how often your money is reinvested. For example, if you invest $100 at 5% interest rate per year for five years, your total amount after five years will be $105. However, if you reinvest the
