Hello Again,
Here's my beginner investing question of the week (thanks art school!). So I saved the money, I know which fund I'm going to start with. So here's what I think I know about dividend's/compound interest, please tell me if I'm understanding this correctly:
1. When you have a fund, the interest gained each year are called dividends.
2. If you roll those dividends back into that same fund you are basically having the money work for you again and earn interest again, and that's called compound interest.
Do I have this right? I know I may be oversimplifying a bit, but is this basically the right idea?
Random other dividend question: How can I make sure this happens? For example, if I open an index fund (I think I'm going with VTSMX from vanguard), will they automatically roll that over for me, or will I have to do something to make this compound interest happen? Like, I don't know, fill out a form or specify that I want the dividends to go right back into the fund?
Sorry if this is a very basic question, I'm just trying to figure out what to expect.