# Power Of Compounding

Do you know the hidden secrets of the rich creating so much wealth every fraction of second?

Is Compounding.

Albert Einstein says that

Compund interest is the Eighth wonder of the world.

He who understands its … Earn it

He who doesn’t … Pays it

– Albert Einstein

## What is the Power of Compounding?

The power of compounding helps a sum of money grow faster than if just simple interest were calculated on the principal alone. Source: Investopedia

After reading this you are like…

Let me make it simple for you

Basically in compound interest, you get interest on your principal amount as well as on your interest.

For example

If you invest 100 Rs and you get 10% on that now your amount will become 110 Rs.

But next time you get 10% on 110 Rs which will become 121 Rs and so on…

## How to make money from money with the help of the power of compounding?

If you can invest 10,000 Rs/month and if you can get 15 % and you invest for 50 years you can easily create 139 Crore as seen.

Listen power of compounding majorly works on two factors

1. Amount
2. Time

Let’s take the previous example but we will change the two factors to see what happens okay.

### Case 1: Amount Same But Time Change

If you invest 10,000 Rs/month and you can get 15% but you invest only for 20 years.

Then, in this case, you will accumulate 1.5 Crore as you can see.

### Case 2: Amount Change But Time Same

If you invest 1 lakh Rs/month and you can get 15% but if you invest for 50 years.

Then, in this case, you will accumulate 1397 Crore as you can see.

When you see all three cases you can easily understand that everything is the game of time and money the longer the investment horizon and amount can create a difference between your and other investments.

So don’t compare yourself with others. Might you can be happy with 1 Crore and at the same time might someone will not be happy creating 1,000 Crore also?