Power of Compounding



Ever thought of how money can work for you, instead of you working hard for money??
Today, we are going to cover just that!
In fact, we will show you a simple trick for your retirement savings!


Imagine you invest 1 Lac Rupees in a mutual fund which typically grows at 15% interest per annum.

Take a look at below table and be surprised how fast your money grows:

Year 0: 100000.00  (+0%)
Year 1: 115000.00  (+15%)
Year 2: 132250.00  (+32%)
Year 3: 152087.50  (+52%)
Year 4: 174900.62  (+74%)
Year 5: 201135.72  (+101%)

Yes, you "DOUBLE" your money in 5 years!
If you are still in doubt, you can double or triple check the above math!!



Imagine you stay invested for 5 more years, can you guess what will be your returns?

Year 6: 231306.08  (+131%)
Year 7: 266001.99  (+161%)
Year 8: 305902.29  (+205%)
Year 9: 351787.63  (+251%)
Year 10: 404555.77  (+304%)

Yes, your 1 Lac investment is now grown over "4X".



As Einstein said, Compounding is the eight wonder of the world, one who understands it, earns it! one who doesn't, pays it!

What Einstein actually meant in the second half of that quote was, if you borrow money as loan with some interest, then compounding works against you. Imagine taking credit card debt and not paying for many years?? Compounding will destroy wealth for who doesn't understand its significance!



If you observe carefully, there are two important hidden magic tricks working underneath for compounding; one is the 15% "GROWTH" and other is "TIME" to exponentially multiply that 15% growth.



Continuing same example further,


Year 11: 465239.14  (+365%)
Year 12: 535025.01  (+435%)
Year 13: 615278.76  (+515%)
Year 14: 707570.58  (+607%)
Year 15: 813706.16  (+713%)
Year 16: 935762.09  (+835%)
Year 17: 1076126.40  (+907%)
Year 18: 1237545.36  (+1137%)
Year 19: 1423177.16  (+1323%)
Year 20: 1636653.74  (+1536%)
Year 21: 1882151.80  (+1782%)
Year 22: 2164474.57  (+2064%)
Year 23: 2489145.76  (+2389%)
Year 24: 2862517.62  (+2762%)
Year 25: 3291895.26  (+3191%)
Year 26: 3785679.55  (+3685%)
Year 27: 4353531.48  (+4253%)
Year 28: 5006561.21  (+4906%)
Year 29: 5757545.39  (+5657%)
Year 30: 6621177.20  (+6521%)


Yes, your 1 Lac invested in a mutual fund which grows at 15% PA, would have multiplied your investment into a staggering 66 Lac!



This simple trick can help you retire with no worries!

Imagine if you just follow simple steps of saving your money (upto 1.5Lac) in a simple ELSS Mutual Funds (Tax Saver Funds), on one hand you save upto 30% tax levied on it and on top of it you multiply your wealth at crazy pace in long run!

i.e., if you save just 12,500 INR every month (1.5Lac per annum) in a ELSS fund which grows at 15% PA, you will end up with over 8.8 Crores in 30 years! 

Perfect savings for you retirement!


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