Compounding is a word which means ‘increasing by manifold levels’. When it comes to finance, compounding means ‘our money multiplying in unbelievable leaps and bounds’. Any good Financial Advisor will tell you where to park your money so it compounds into multifold levels. The power of compounding is immense when invested in products like Mutual Funds. This can be easily felt when the investment in Mutual Funds is for longer duration of time.
The power of compounding is in fact the eighth wonder of the world particularly when invested in Systematic Investment Plans. Systematic Investment Plans being one of the best investment options, you can expect your money to compound every time you invest without an iota of doubt. Let us look at some key features about the power of compounding.
Key features about the power of compounding
Looking at the key features of compounding interest will provide a clear understanding about the magic concept.
Compounding Interest goes well with time factor
People who have reasonable experience in investing in products like Mutual Funds understand the concept of Compounding Interest clearly. Ask them what earned them their wealth and the answer for sure would be patience. Only when you allow the interests on your investments to accrue can the same start earning their interests. A clear understanding of this will make you accept the benefits of long term investments when it comes to compounding interest
Compounding Interest makes your wealth a snowball
If you have ever seen how an Avalanche gets formed, you will easily understand the knack of building huge wealth utilizing the Compounding interest concept. Investing in Mutual Fund products and Systematic Investment Plans builds your wealth as a small snow ball builds the Avalanche. A small snowball becomes a huge one by constantly adding snow. When the same is rolled, the momentum it gains causes Avalanche. In the same manner, a small investment you make and the subsequent additions to the same will create an Avalanche of wealth on the long run
Compounding interest makes a middle class investor into a millionaire
Investing in Mutual Funds and Systematic Investment Plans can make an ordinary man belonging to the lower middle class into a millionaire over a period of time. This is made possible mainly by the compounding of interest over years. When your initial investment earns interest, it might look like another ordinary finance product. But as time goes and when your interest start earning interest you will witness the power of compounding interest as a millionaire yourself.
The story of Compounding Interest – Slow and steady wins the race
Don’t expect to experience the magic of compounding interest when you invest in wrong products just because they yield high returns. They may crash all of a sudden making you lose the race. Instead, go in for products like Mutual Funds and Systematic Investment Plans that grow slowly but steadily. Like the tortoise which was slow but steady, your patience will make you earn compounding interest. You will soon witness yourself being looked at as a millionaire.
Compounding interest protects your smile and sleep
Wealthy people look confident and smiling always. You can see that their eyes look powerful all the time pointing out that they have had a good night’s sleep. This is mainly because of their confidence that even while they are sleeping their money is growing. Investments made in products like Mutual Fund earn you so much of Compounding interest that only you sleep not your investments. The peace of mind this offers is compounding in nature too.
Compounding interest benefits the financially downtrodden more
If you are one among the financially downtrodden, you must feel happy to be so. Make a small investment in Mutual Fund products and forget that you have invested. When a Financial Planner tells you this you may feel something is wrong with him. Believe me, he is offering you one of the best advices in the world with a good intention to make you a millionaire in a few years down the line.
Compounding interest disciplines you and rewards you for the discipline
Compounding Interest concept makes your investments a huge hit when the same is done in a systematic manner. Investing the same quantum of amounts month on month not only inculcates the habit of savings in you but also averages out the market fluctuations. This is the reason why Systematic Investment Plan is highly profitable and works best for those who believe in Compounding interest.
Compounding Interest converts the broke into rich
Many among us pay interests because we choose the wrong products for investment. We continue to be financially downtrodden wondering how the rich became so rich. The answer is simple. They invested their money in high profit yielding products like Mutual Funds. If you have true intention to convert yourself into a millionaire, start investing in Mutual Funds and Systematic Investment Plans.
Let us give our children financial abundance through compounding interest
Compounding interest is the eighth wonder of the world since it can make money to run behind you instead of you running behind the same. The typical world we must provide to our children must be overflowing with wealth and the same is possible only through compounding interest.
To put it in a nut shell….
- Power of compounding provides relief to investors from short term market volatility
- Power of compounding, in simple words is, is interest earning interest
- Compounding, with respect to your investment will help you convert a few bucks in your hands into unlimited wealth
- Power of compounding acts as the core of prudent investment
- Continually adding small chunk of amounts to an earlier made investment will help you build unbelievable amounts of wealth
- Compounding is investors’ best friend that aides in quick wealth building by adding continuous return to your finance portfolio
- Compounding is an amazing concept that keeps adding wealth to your accumulation even after you start withdrawing the same in small chunks