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Do my 401k/Roth accounts benefit from compounding?
You might be confusing two different things. An advantage of investing over a long term is the compounding of returns.  Those returns can be interest, dividends, or capital gains.  The mix between them depends on what you invest it and how you invest in it.  This advantage applies whether your investment is in a taxable brokerage account or in a tax-advantaged 401K or IRA.  So, start investing early so that you have longer for this compounding of returns to happen. The second thing is the tax deferral you get from 401(k) or IRAs.  If you invest in a ordinary taxable account, then you have to pay taxes on your interest and dividends for the year in which they occur.  You also have to pay taxes on any capital gains which you realize during the year.  These yearly tax payments are then money that you don't get the benefit of compounding on.  With 401(k) and IRAs, you don't have to pay taxes during these intermediate years.