ABSTRACT
Like a snowball rolling down a hill, the investment continues to grow. There are two types of investments that benefit from compounding namely the Series EE and Series I US savings bonds. Once that interest has been accrued, the next interest payment calculated will be based off of the new, higher amount of the bond. Those savings bonds have a limitation on the number of years that they will accrue interest currently 30 years but many other types of investments can continue to compound returns indefinitely. With individual stocks, artist encounter compounding with shares of companies that pay regular dividends. Consequently, they will receive continuously larger dividend payments for as long as the company pays dividends. This chapter presents a specific example to help illustrate this point. As an investing strategy, compounding can benefit both the retirement and non-retirement portions of artist portfolio. Having dividends reinvested in additional shares is often referred to as "DRIP" investing for dividend reinvestment plans.
