When you buy an investment that pays interest or dividends, you can reinvest that money back into the investment. When you do, not only does the money you invested earn interest or dividends, so does the interest or dividends you reinvested. This increases the amount of future interest or dividends, enabling you to create wealth more quickly than if you were to spend the interest and dividends as you receive them. Compounding is widely regarded as one of the most important wealth-building tools available. Also called compound growth.