all investment have that compounded effect if you can find them. real estate is not as easy as what you might think. once you commit the mistakes, you have to bear with the mortagage for the rest of your live; or sell it with much losses.

stock market offer higher liquidity. in case you did wrong, you can sell anytime and no long life commitment is required. but of course, it pays to hold good stocks forever.

The answer is in your question “Compound”ing dividends. You buy dividend stocks that grow the dividend payout 10-30% a year and watch your money compound.
You can use a service like to research dividend growth rates, payout ratio’s etc.
Good Luck.

Tax free is the best way, so your options until the Dems change things to tax more are -

retirement accounts (IRAs, 401ks)
real estate (exchange up, don’t sell)

Any good investment advisor will tell you to diversify and to continue investing for the long run over a long time. I have stocks and real estate (my home) and have held both for the long term. I have been compounding very well since I started investing because I have been taking a long term view. I have a good start on retirement and quite a bit of equity in my house (that I’ve had for 12 years) because of this view - my house is at least double what it was worth when I bought it, despite a soft market.

A diversified portfolio that you buy and hold over the long run. Don’t try to beat the market, and don’t get into investments that are already hot. For example, real estate is probably dropping a bit now. Other than buying your own home, it may not be a great investment at the moment.