how does one use compounding 
compounding is a primary tool in money management the longer you leave an investment in without cashing it out the more money you are able to earn from your initial investment the biggest advantage of exponential earning rather than linear earning is that if the earning was linear the net increase would remain the same every period that is to say if a person earns 2 000 in interest per year then that is the increase no matter how much money is in the investment at the time compounding on the other hand ensures that the more an investment is worth every year the higher the net increase will be as a result investors are encouraged to leave both the principal and the interest earned in the investment and watch it grow more quickly than if they kept only the principal 