8th Wonder of the World: Power of Compounding for Wealth Creation

1. In the previous blog, I had told you about the Rule of 72. Today I am going to tell you all about the easiest way to wealth creation i.e. using power of compounding. If today you invest 10000 units and you are likely to get 18% Compounded Rate of Interest per annum. This simply means that your money will double in approx 72/18=4 years (Rule of 72 as discussed in the previous blog).

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2. Now see the power of Compounding: What happens to your money if it grows at just 18% Compounded rate of Interest annually;

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10000 to 20000 (In 4 years)

20000 to 40000 (In 8 Years)

40000 to 80000 (In 12 Years)

80000 to 1,60,000 (In 16 Years)

1,60,000 to 3,20,000 (In 20 Years)

3,20,000 to 6,40,000 (In 24 Years)

6,40,000 to 12,80,000 (In 28 Years)

12,80,000 to 25,60,000 (In 32 Years)

25,60,000 to 51,20,000 (In 36 Years)

51,20,000 to 1,02,40,000 (In 40 Years)

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3. Now after seing this, I really wished that my parents had deposited just 10000 units when I was born. That would have made me multi millionier when I really needed that money.

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4. I know, you must be thinking that who would pay you 18% Compounded Rate of Interest in today's world. But If you see the track record of Mutual funds, you will find that getting 18 % Rate of Interest is not a big deal. And if you know the knitty Gritty's of Stock Market, then nothing like it.

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5. So go ahead and enjoy a prosperous life and make sure that your kids also have a prosperous life. What you require is just financial planning and patience to allow it to mature.