Is there any relation between compounding in the share market? Like when you invest in a savings account you get a compound unterest, is there anything like that when you buy shares? If not how is buying shares(in the long term) more profitable than a savings account

Question

Is there any relation between compounding in the share market? Like when you invest in a savings account you get a compound unterest, is there anything like that when you buy shares? If not how is buying shares(in the long term) more profitable than a savings account

In: Economics

Answer 1

There are stocks that pay dividends (as well as having normal gains). There are brokers that allow you to reinvest the dividends (DRIPs) in the same company. This is essentially the same as compound interest.