Compounding
Etymology
From Latin “componere” (to put together), com- plus ponere (to place), reaching English through Old French “compondre.” In finance, interest that is itself put together with the principal earns further interest.
noun · /kum-POWN-ding/
The process by which growth is applied to previous growth, so gains accelerate over time.
What it names
It explains why small, steady returns become enormous given time — the engine of both wealth and debt.
Example
Ten thousand dollars growing at 7 percent compounded annually roughly doubles in a decade — and doubles again in the next.
Related idea
Compounding is exponential growth applied to money; it works ferociously in reverse too, which is why compounding credit-card debt outruns linear repayment plans.