I've read about compounding and understand dividend reinvestment, but still not sure about compounding on stocks with no dividends.
Is this scenario correct?
Share purchase price = $ 10.00 $ 0 dividend stock Share sell price one year later = $ 10.00
Profit = $ 0.00
I hear statements like "a stock returns 7 % annually and with compounding interest your investment is worth x dollars."
But, if a buy a stock and it is 7% higher at some point later, wouldn't I just make a flat 7% on the original principal?
$100 investment, sell at anypoint in the future, and make $ 107.00? Even if it is 30 years later?