Hey Dear Friend, Do you know the power of compounding?
Lots of people in our country keep their money in idle condition or investing their hard earned money in some basic investment plan.
Investing your money in those investment plans which are not providing compounding interest is just a basic investment and you will not get any high return.
When you are aware of power of compounding, definitely you will choose only and only those plans which are ready to provide compounding interest.
Let’s Discuss the Power of Compounding
If you want to reach the moon, can you build a stairway? Imagine you start with just one step in the first day and double the steps built every day.
How long do you think it’ll take?
Two years or 20 ? Let’s find out.
Within 31 days you will have covered over 6.5 Lakh kilometers and crossed the moon But what if you stopped after 15 days?
You will have covered only 10 kilometers, This is the power of compounding.
It creates a snowball effect, It does the same to money Over time, small amounts keep adding up to create a large corpus. The growth accelerates as time goes by and the corpus keeps getting larger.
The key to leverage the power of compounding is to stay invested for a longer term. The longer your investments time frame the more compounding works at an accelerated pace Leveraging the power of compounding for maximum benefits.
When To Start Investing?
Start early in the simple word. Many young investors keep procrastinating. Thinking that they will compensate later in life by investing a larger amount to cover up for the lost time.
They lose the opportunity to benefit from the extraordinary power of compounding.
Understand with this Example –
Sharafat – Invests 5,000 rupees every month since the age of 25.
Deepak – Invests 7,000 rupees every month since the age of 35.
By the age of 60 both have invested 21 lakh rupees Assuming a return of 12% ,Sharafat will get over 3.2 Crore rupees and Deepak will get only over 1.3 Crore rupees which is 59% less.
This is why starting early is essential.
Now have a look on this, How does the power of compounding help in creating wealth?
The power of compounding when combined with long term view of equity investments have the potential to help you beat inflation And build a substantial corpus.
Long term gains on equities are also tax-free Which makes it much more attractive as compared to other asset classes?
Just like the stairway, start early, build regularly and don’t withdraw your efforts halfway. This will ensure that your investments derive maximum benefit from the power of compounding and help you build a sizable corpus.
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Read this also – PARAG PARIKH LONG TERM EQUITY FUND REVIEW