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Etfs/Compound interest
First Time Investor
Probably a stupid question, but was just wondering if etfs have compound interest or if it's only certain ones that do.
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Joel K
Asked on 22 November 2022
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Hey Joel.
No stupid questions around here mate :)
Yep, they certainly can and historically have done so in most cases. In fact, any investment which has a return can benefit from compound interest. Compound interest is really just the phenomenon where you earn a return on an investment (even cash in the bank), and the money eventually multiplies by itself because of the returns building on themselves over a long period of time.
Basically: Your money earns money, and then that new money earns even more money. Happens with shares, property, anything which delivers a positive return over time.
Hope that makes sense!
Dave
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I’ve started investing in IVV monthly. How can I make sure I’m benefiting from compound interest?
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