Grow your investment with power of compounding

Do you think that hard work makes you richer than a rickshaw puller who work hard on the road or a construction worker working the same means that only hard work is not enough to achieve life goals What we need more than this is that all these examples are sources of active income and active income only exists as long as we work.

 

So, we need to think cleverly and adopt a new way of earning when we do not work which is passive income. Today the rate of inflation continues to increase and the source of income is limited.
 

Compounding's principal

Compound interest is nothing but reinvestment of interest at the same rate investment and interest income also generates an additional return of compound interest.
 
This means that interest income also generates additional return on investment. Now we understand why it is such an important concept in the world of investment.
 
Some people are rich because they are not only hard working, they are smarter than others, they think in different ways and they understand the concept of investment and compromise.
 
Imagine if you have an opportunity to earn a salary, you can earn a limited amount for the time invested in the company you get at the end of the month where you work or for your service. The source of income is also limited until you stop working if you stop working or if you take retirement. 
 
I welcome you where you can unlock the knowledge of finance which helps to get more things in a short time, it may be that you understand the concept of money and investment, but the question is how to grow your money, so let us understand the power of compounding.
 
Albert Einstein said that his eight wonders of the world and anyone who understands the power of compounding cannot stop him from becoming rich.
 

The Law of Compounding

Start investing as soon as possible and give time to your investment. Investing starts with your first earnings, then no matter how small the amount of investment may be, it can be small but after some time a small amount can be made into a large amount Can be changed. The compounding effect works so the sooner you start your investment, the more time it will take for your money to grow.
 
Do not increase between investments and time is an important factor that plays an important role in investment. It may be possible that your investment graph is linear at first but will grow rapidly soon.
 

Market instruments for investment

The investment in Understand Finance of Most people prefer a savings account, recurring deposit (RD), fixed deposit (FD) or some government approved scheme or bonds in a secured instrument. Money is not bad in a single financial instrument and the approach.
 
But we have few other options available in the market which are regulated by government approved bodies or regulators like Securities Exchange Board of India (SEBI), Reserve Bank of India (RBI) and other institutions.
 
There are some investment options available such as mutual funds, index funds, bonds, ETFs, investing in stocks, which can provide good returns if invested smartly.
 
The average interest rate in secured investments such as a savings account, recurring deposit (RD), fixed deposit (FD) is between 4-8%, but if you use index funds or mutual funds, you can get it over 10%. Can get it. The range of 10 to 20% in general depends on the fund and their portfolio.
 

How to use compounding power

Market research

 
Being an investor, you need to continue the current market trend and sector analysis and explore the upcoming policy which directly or indirectly affect the market.
 

Understanding the business model

 
It’s important to know where you want to invest, their product line and scope, peer competitor and future growth potential.
 

Don't put all the eggs in one basket.

 
Keep your investment portfolio versatile and use strategies to distribute the investment amounts in a way that covers a significant growing area and has opportunities in the near future.
 

Update your knowledge 

 
Keep yourself updated with the current market situation, attend workshops and seminars and gain new investment and financial knowledge that help improve your investment strategy.
 
 

Conclusion

 
Compounding is one of the important factors that help to increase your investment if set smartly. It is always helpful to keep short-term and long-term goals in mind when you invest.

While it is always recommended to get knowledge and experience before investing, the best strategy for investing is to start with a small amount when you understand that the basic concept can increase investment.