The answer to the question depends on the specific investment vehicle you are using. If you are using an investment vehicle such as a mutual fund, then it is likely that the fund will automatically reinvest your dividends and capital gains, resulting in a compounding effect. However, if you are investing in individual stocks or other investments, then you may need to manually reinvest the dividends and capital gains to achieve a compounding effect. It is important to understand the terms of the investment vehicle you are using to ensure that you are achieving the desired compounding effect.
