Definition of Compounding:

  1. Method of estimating the future value of a present investment by applying compound interest rates. Opposite of discounting.

  2. Forbear from prosecuting (a felony) in exchange for money or other consideration.

  3. Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will generate earnings from both its initial principal and the accumulated earnings from preceding periods. Compounding, therefore, differs from linear growth, where only the principal earns interest each period.

  4. Made up or consisting of several parts or elements.

  5. Make (something bad) worse; intensify the negative aspects of.

  6. Make up (a composite whole); constitute.

  7. Compounding typically refers to the increasing value of an asset due to the interest earned on both a principal and accumulated interest. This phenomenon, which is a direct realization of the time value of money (TMV) concept, is also known as compound interest. .

  8. A thing that is composed of two or more separate elements; a mixture.

Synonyms of Compounding

Composite, Complex, Be composed of, Be made up of, Be constituted of, Be formed from, Aggravate, Worsen, Make worse, Add to, Augment, Exacerbate, Intensify, Heighten, Increase, Magnify, Amalgam, Amalgamation, Combination, Composite, Blend, Mixture, Mix, Admixture, Meld, Fusion, Synthesis, Consolidation

How to use Compounding in a sentence?

  1. The air smelled like a compound of diesel and petrol fumes.
  2. When banks or financial institutions credit compound interest, they will use a compounding period such as annual, monthly, or daily.
  3. A compound noun.
  4. Compounding can thus be construed as interest on interest—the effect of which is to magnify returns to interest over time, the so-called "miracle of compounding.".
  5. Compounding is the process whereby interest is credited to an existing principal amount as well as to interest already paid.
  6. A dialect compounded of Spanish and Dutch.
  7. Prisoners lack of contact with the outside world compounds their problems.

Meaning of Compounding & Compounding Definition



  • Compounding is the process by which income from assets, capital or interest is applied to generate additional income over time. This growth is based on the loss function, because this investment will benefit both the initial capital and the accumulated profits of the previous period. Therefore, overall interest is different from linear growth, where only investors are interested in each period.

    • Compounding is the process by which interest is paid to the current principal, as well as the interest that is paid.
    • Therefore, capital can be interpreted as interest on interest, the effect of which is to increase interest income over time, which is called the miracle of compound interest.
    • When a bank or financial institution pays compound interest, they use annual, monthly or daily interest rates.

  • Compounding means, The cumulative effect that the restoration of investment income automatically generates additional income.

  • The process by which the value of an investment increases rapidly over time due to compound interest.

Meanings of Compounding

  1. An object that consists of two or more separate parts.

  2. Contains or consists of several parts or elements.

  3. Make-up (all compost) is formed.

  4. Doing bad (something bad) reinforces the negative aspects.

  5. Failure to prosecute (crime) for money or other considerations.

  6. An open space is surrounded by a fence, for example, around a factory, large house or prison.

Sentences of Compounding

  1. The air smelled like a mixture of diesel and petrol

  2. Compound name

  3. Spanish and Dutch dialect

  4. The detainees' lack of contact with the outside world added to their worries.

  5. The villages are quite dense and the millet consists of groups surrounded by fences.