Power of compounding: Here’s how money will work for you

‘Compound interest is the eighth wonder of the world… he who understands it, earns it… he who doesn’t… pays it’, said Albert Einstein. Those who agreed with him are now yielding results.

Making money through investments is not tough, if you start early. With time on your side, significant wealth can be created through compound interest.

If your motto is to create wealth and have a millions bucks when you retire, you must aim for long-term investment and unleash the power of compounding.

To make compounding work in your favour, you have to get two things right-time and discipline.

When you start investing early, say in 20s, you have time to save and invest. By the time you touch 45, you will see your money grow.

For instance, if you started investing Rs 3,000 every month when you were 20 and continued till 45, you would receive around Rs 30 lakh.

Earmark your investments for long term and do not withdraw. The investments will keep growing, thanks to compounding, leading to huge corpus. You can diversify your investments and allocate funds in several instruments such as PPF, equities, National Savings Certificate, mutual funds, etc. Be it any tool, you should aim to stay invested for long term.

But, this requires discipline.

Wealth can be created only through discipline and conscious effort. Keep investing money and with time, your money snowballs and grows. The contribution made in early days will pay you rich dividends in the later stage of your life.

Through power of compounding, you can make your dreams of owning a car, a house, exotic vacation, opening a business, etc., come true. It can also take care of your child’s education and retirement. The key is to stay invested.

Power of compounding is beneficial and you never know, you could end up making a fortune, over time.