Compounding interest occurs when the interest generated by an account is re-invested in the same account. In the next accrual cycle, you earn interest on both the principal and the interest from the previous cycle.

This is no different from a regular IRA, 401K, Certificate of Deposit (CD) or interest bearing savings account. The big difference between a ROTH IRA and a regular IRA is that in the ROTH you pay taxes up front, and in a regular IRA you pay taxes on the money when it is withdrawn.

How is Blake E explanation answering the question?

All the personal finance books and site say you should invest in Roth IRAs because of compounding interest, but for the most part IRAs are mutual funds and other forms of stocks (I know there can be other investment). Forgetting dividends, I don't see how it is yearly compounding interest.