Different investment instruments compound the earnings with different timelines. Similarly, these investments will have a different impact on the growth of your investments due to the power of compounding. The most common ways of compounding the interest are as given below:
Annually Compounded Return: Interest is calculated only once a year and reinvested
Half-yearly Compounding: Interest is calculated twice a year
Quarterly Compounding: Interest is calculated every three months
Monthly Compounding: Interest reinvested at the end of every month
Other hypothetical compounding scenarios, like the ones given below, can also be presented:
Daily compounding
Exponential compounding
You can use the compound interest calculator to estimate the impact of different modes of compounding on your investment.