Compound Interest

Compounding. 

Like you start with a number—call it 4. You're growing at 10%. Then you com-pound on it and it becomes 4.4. So now you forget 4. And you have 4.4. Then you compound again at 10% and it becomes 4.84. 

That's geometric compounding. You pound on the latest number. 

Conversely, arithmetic compounding of interest (or any rate, for that matter), would just take 3 iterations of 4 and add the 10%, meaning that you start with 4, then add 10% to get 4.4 and then add another 10% of 4 or 0.4 and you get 4.80. 

Notice that in arithmetic compounding you ended up after only 3 compoundings .04 less. Too bad for you. Next time, go geometric if you wanna get big.