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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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Dave Gow - Strong Money Australia

Investor

Wed, 23rd November 2022

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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Laksheena Bhunjan

Investor

Tue, 8th October 2024

I’ve started investing in IVV monthly. How can I make sure I’m benefiting from compound interest?

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