How Power of Compounding Works – Secret of wealth creation
If you invest Rs. 1000 per month for 30 years and interest rate is 12% and if you invest Rs. 3000 per month for 10 years at the same interest rate of 12%, in both the cases you invest Rs. 360000 in total, will there be any difference in maturity amount?
If you invest Rs. 1000 per month for 30 years you get Rs. 30.8 lacs
If you invest Rs. 3000 per month for 10 years you get Rs. 6.72 lacs
Is this not amazing? If you dont believe this, you can check it on Microsoft excel. Power of compounding works in long term, make it work for you. It has great importance when it comes to retirement; if someone wants the same maturity amount and he has just 10 years to invest he needs to invest 4.5 times Rs. 13752 per month to accumulate the same amount. One should start planning life at earliest. Power of compounding can make you wealthy and give you 2nd income to be confident in job market.
At present there are many instruments which give you returns of 12% or more, one should always check the outcome or possible maturity amount from the investment before investing in the scheme. Although planning should be done in comprehension only as planning one life event in isolation may negatively impact other life events. So plan comprehensively.