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Stocks and Shares Compounding

Rich48 · 2023-06-12 14:48:29

Hi all, looking for some advice about investing in stocks and share ISA. Videos on Youtube etc tell us about the benefits of compounding and how this can increase the value of investments over time. 1. Am I right in saying Index funds such as S&P 500 don't automatically re-invest any increase in share value? 2. If your…

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Bravepants Posts: 1,643 Forumite

13 June 2023 at 3:04PM

Compounding can also refer to the growth of stocks due to companies holding back profits to grow the company. As a company grows bigger you would expect the output to increase, which generates more profit, which can be used to grow the company further. So don’t just think of compounding being just due to dividends being reinvested.

If you want to be rich, live like you're poor; if you want to be poor, live like you're rich.
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