How the magic ofcompounding makes ordinary people wealthy?

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Akansha

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The magic of compounding is that your money earns returns, and then those returns start earning returns too. Over long periods, this creates exponential growth rather than simple linear growth. FV = PV(1+r)^n Where: PV = Initial investment (Present Value) r = Annual rate of return n = Number of...
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The magic of compounding is that your money earns returns, and then those returns start earning returns too. Over long periods, this creates exponential growth rather than simple linear growth. FV = PV(1+r)^n Where: PV = Initial investment (Present Value) r = Annual rate of return n = Number of years FV = Future Value A simple example Imagine two ordinary people: Anita invests ₹5,000 every month from age 25 to 60. She earns an average 12% annual return. By retirement, she would have invested about ₹21 lakh, but her portfolio could grow to well over ₹3 crore because the returns themselves keep generating more returns. If she waited until age 35 to start investing the same amount, she would likely end up with less than half as much, despite investing for only 10 fewer years. Why ordinary people become wealthy Compounding doesn’t require: A huge salary Perfect stock picks Being a financial expert read less
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