I know this is a basic question but I haven't really found it explained so that I understand it. I understand the concept of compounding but don't understand how returns work. Do you get paid a percentage every year for how much your stocks go up? Does that go back in to purchase more stock? I can see how it would compound if that is the case. I keep reading about how if you buy a stock (say Coke) and leave it there for years, as it's price increases you make returns and then your returns make returns, thus compounding. This only makes sense to me if you get paid on returns and reinvest back in to gain more stock. Please help! Thanks in advance! :¬)
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