MAGIC OF COMPOUNDING
MONEYMONK WEEKLY MESSAGE 18/2020
Magic of
compounding
What is compounding
?
When a sum of money
is saved/invested in an account like PPF regularly every month. Interest
is added to it periodically and the interest earned again earns interest thus
getting compounded. Over longer periods the growth is magically high and thus
is ideal for creating retirement funds.
Example
Rs.1000/- saved and
invested every month in Provident Fund which gives 8% return annually grows as
under (figures are approximate)
20 years Rs.
6 Lakhs
25
years 10Lakhs
30
years 15Lakhs
40
years 34Lakhs
Key points to note
1. Regular savings
2. No withdrawals
3. Longer the period better the savings
grow.
4. Requires financial discipline but makes
for a happy retired life.
Note:
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