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You are both right. What is compounding? It is when you add the gains, year by year.


The gains are multiplied though, no?


In the vocabulary of finance you don't multiply in gains, you add them. It probably historically derives from dividends being added. At the transactional level you never actually multiply money, after all (unless you're a bank).


What is multiplication if not adding over time?


Everyone is right! It’s a multiply-accumulate (accumulate of course a synonym for add)




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