Wish you all a very happy Diwali
I have been on a break from writing the blog for the last two – three weeks
These last few Diwali holidays I could get time to watch television and all the finance channels like ET now and CNBC etcetera, had programming talking about how well the market had panned out in the last 12 months
That got me thinking on to what I have been writing about for the last few posts on the power of compounding
If you look at the fact that some stocks grew by 40% and there were others which grew by 25% and and maybe some only group by 15%. On an average if there was a growth of 25% then in 3 years you will double your money if you follow the equations I spoke about earlier. Which means if you have a working life ahead of you for the next 15 years then you will double your money every 3 years and by the 15th year your money would be close to 30 times what you started with
So if you start by saving 100000 in this year in the next year year year 100000 and then 1 lakh in the subsequent year
The first one lakh will become 2 lacs by the end of the third year, 4 lacs by the end of the 6th year, 8 lacs by the end of the 9th year, 16 lacs by the end of the 12th year and 32 lacs by the end of the 15th year by the 16th year you would have another 32 lacs (from the 1 lakh that you saved in the second year)and by the seventeenth year another 32 lakhs (from the 1 lakh you saved in the 3rd year)
Suggest by saving 1 lakh for the next 3 years you would end up close to about a crore of Rupees in the 18th year and this is without doing any work
Now I understand that there are caveats to this discussion. Obviously the fact that you need to be doing about 25% per annum, but the fact is if you can monitor and manage your Investments in instruments which can give you this kind of Returns you would really become financially free without too much of a hassle
That’s the power of compounding which can make dramatic differences to where you start from and where you might actually end up. The fact is that the earlier you start and this point I have been ranting about in my multiple posts, the chance of you retiring or living a life on your terms is extremely high.
So this Diwali make a resolution to start investing wisely and let the power of compounding work for you.
So till next time figure out how you can just start small but early and on a consistent basis keep investing.