Power of Compounding: Before investing anywhere, it is important that you do financial planning. The sooner you start investing, the more profit you will get.
Earning money is not an easy task. But, it is even more difficult to make money from that money. This is where investment comes in handy. Still, you may not get as much from investment as you thought. Then find out where to get more interest. Which product to invest money in? This is where the formula for compounding comes in handy. If you understand the power of compounding, then no one will be able to stop you from becoming rich.
Before investing anywhere, it is important that you do financial planning. The sooner you start investing, the more profit you will get. Investment should be for long term. Let’s know…
What is Compounding? (What is Compounding)
Compound Interest is also taught in school in childhood. But, in reality, its power is understood only by an investor. If you understand in a simple way, the interest you are getting on investing, the interest you will get on it is called compounding. Along with the principal, interest is also earned on its interest. Compounding is the best way to double or triple your investment.
SIP of 10 thousand for 10 years
- Estimated return: 12% (annualized)
- Duration of investment: 10 years
- Total investment: Rs 12 lakh
- Net value of SIP: Rs 23 lakh
- Benefit: Rs 11 lakh
SIP investment of 10 thousand for 15 years
- Estimated return: 12% p.a.
- Investment period: 15 years
- Your total investment: Rs 18 lakh
- Net value of SIP: Rs 49.96 lakh
- Benefit: Rs 31.96 lakh
10 thousand rupees SIP investment for 20 years
- Estimated return: 12% p.a.
- Investment period: 20 years
- Your total investment: Rs 24 lakh
- Net value of SIP: Rs 98.93 lakh
- Benefit: Rs 74.93 lakh
The longer the investment, the greater the benefit of compounding
The power of compounding will be understood when you start investing from an early age. The more time you give to your investment, the more profit you will get. Compounding will also be higher on investment of 20-25 years instead of 5-10 years.
DISCLAIMER
We have taken all measures to ensure that the information provided in this article and on our social media platform is credible, verified and sourced from other Big media Houses. For any feedback or complaint, reach out to us at informalnewz@gmail.com
