What does compounding mean for long-term investing?

Compounding means earning returns not only on the principal but also on interest or returns already earned, and its effect grows the longer the period.

Even at the same rate of return, reinvesting your returns and staying invested for a long time steadily widens the gap with simple interest. However, returns on investment assets are not constant from year to year and losses can occur, so the results of compound interest calculations should not be taken as a guarantee of returns.