How the Power of Compounding works for you?

Many dream of a financially secure future, but not all manage to get there. Regular savings can provide phenomenal returns over the long run. Despite countless financial obligations and huge debts, one must set aside a fixed amount every month. This can be a contingency buffer or surplus that can bail you out of financial crisis . Wouldn't it be wonderful if your small contributions grew into a huge avalanche of wealth over a period of time?


The power of compounding is phenomenal. Your savings grow exponentially with time, and the sooner you start the more will be the quantum of returns. For example, assume a person sets aside Rs 1,000 in an instrument each year. If the returns were 10 percent compounded annually, at the end of one year, the investment would have grown to Rs 1,100. At the end of the second year, the investment would have grown to Rs 1,210. 

In the current high interest regime, where the cost of borrowing is high, people who have taken a home loan and a personal loan may be walking on tight finances. The increasing cost of living and high inflation levels may increase the strain on the wallets. Periods of economic recession and slowdown are difficult to predict. Hence, it makes sense to make saving a regular habit and benefit from the power of compounding.

“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.”