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adastra22
3 months ago
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Boring is what we wanted
You are both right. What is compounding? It is when you add the gains, year by year.
yxhuvud
3 months ago
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The gains are multiplied though, no?
adastra22
3 months ago
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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).
TheFuzzball
3 months ago
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What is multiplication if not adding over time?
paulsutter
3 months ago
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Everyone is right! It’s a multiply-accumulate (accumulate of course a synonym for add)
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