Power of Compounding and SIP
Albert Einstein once said, “Compound interest is the 8 th wonder of the world. He who understands it earns it and he who doesn’t pays it.” As the great scientist mentioned, when it comes to investing for wealth creation, the biggest differentiator is the Power of Compounding. The best part is that it is certainly in your hands to make the most of this opportunity. Let us explore the power of compounding in detail. Power of Compounding In simple words, the power of compounding means earning interest on investment, and the same interest is added back to the principal amount. Let us take an example to understand the power of compounding. If you invest ₹1 lakh in one instrument giving compound interest and another ₹1 lakh in an instrument giving simple interest, at the same time. Both investments are giving 10% interest per annum for a period of 10 years each. Particulars Compound Interest Simple Interest Principal invested ...