Power of Compounding
Background
Compounding means earning returns on your returns. When profits are reinvested, they start generating their own profits, leading to exponential growth over long periods.
Explanation
In the early years, portfolio growth looks modest; later, the same percentage return creates much larger rupee gains because it is applied to a bigger base. Interrupting compounding with frequent withdrawals or long gaps in investing can drastically shrink your final corpus.
Example
₹15,000 per month at 12% for 10 years becomes roughly ₹34 lakh; for 20 years about ₹1.2 crore; for 30 years around ₹3.5 crore. Most of the wealth arrives near the end thanks to compounding.
Try the planner
See how this concept fits your own retirement plan.
Retirement Planner | All Retireopedia terms