HOW COMPOUNDING WORKS?
Compounding earns a return on every rupee,as your initial principal increases,
it gives you the ability to gain higher returns.
Consider this hypothetical example of two investors:
Power of Compounding: Key is to start early
Investor A Investor B
Contributions Rs. 5000 per month starting at age 25 Rs. 10000 per month starting at age 35
Total Contributions 24 Lakh 36 Lakh
at age 65
Corpus at age 65
with 12%* CAGR 5.15 Cr 3.24 Cr
Earnings(contribution 4.91 Cr 2.88Cr
minus corpus)
Investor B never catches up A and the difference is substantial. Save yourself from facing Investor B's situation.
