Understand the Power of Compounding

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Power of Compounding

Power of Compounding - Compound Interest Calculator.

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To understand the Power of Compounding solve this simple riddle -

How many days will it take for 1 to cross 1 Crore, if the amount were to double every day?
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25 Days!!!! You read it right, it just takes 25 days for 1 to cross 1 Crore. On the 25th day, the amount becomes 1,67,77,216.

Understand the Real Power of Compounding

If you want to understand the Real Power of Compounding consider an example of 10,000 invested over different periods of time -

Suppose you invested 10,000 today at an interest rate of 15%. It will become 100,000 (10 times) in 25 years when compounded annually while it only becomes about 38,000 when calculated using simple interest.

Now, you must think it all looks good in theory and beautiful in charts, but could it be done in reality?

Well, we are pleased to tell you that a guy did do this!

His name - Mr. Warren Buffett.

If you think Warren Buffett’s investment secret is stock selection, you are wrong. His secret is ‘Time’

Let’s see how Warren Buffett took advantage of time to create infinite wealth.

Net Worth of Warren Buffett

On his 59th birthday, Warren Buffett’s net worth was only $3.8 US Billion.

  • In 6 years, his wealth multiplied 4 times!
  • In 12 years, his wealth multiplied 9 times!!
  • In 18 years, his wealth multiplied 15 times!!!

Power of Compounding, Super-Power right?

Now, let's understand how you can take this power to your investments! Follow these simple things to put the Eighth wonder of the world at work and grow your wealth -

  • Invest for long term (as long as possible)
  • Invest in equity markets (Great quality stocks only, ofcourse)
  • Start as early as possible (Warren Buffett started at the age of 11)

While all these steps are very important, step 2 - “investing in great quality stocks” is something that would require a lot of time and efforts from an investor.

Efforts and time in terms of thousands of pages of reading, millions of data points to analyse and years of experience, constant monitoring of your investments and what not!

Seems like a daunting task? Feels impossible to do? Don't worry, we’ve got you covered with StockBasket.

What is StockBasket?

StockBasket is India’s first long term buy and hold investing platform. It has expert-curated baskets of stocks or mini portfolios of top quality companies for you to invest in just a few clicks!!

Our experts with tons of experience have handpicked top stocks in the form of baskets, so that you don’t have to do the hard work!

4X Target in 10 Years

We want to give you a solution using our giga trading technology & algorithms, where you could just invest in a ready-made basket of stocks, and use technology to manage these mini portfolios or baskets.

This marked the birth of our long term buy and hold investment platform - StockBasket.

Our proprietary engine evaluates over 2 crore data points to determine the quality of the stocks in your baskets everyday, reducing the risks of your investments to a minimum.

Summary

  • Power of Compounding is the real magic behind every successful investor. It can transform a mere 1 Lakhs into 66 Lakhs!
  • But for Power of Compounding to work, you need to invest in great quality stocks and stay invested for the long term.

Both of these prerequisites are fulfilled single-handedly by StockBasket. You can explore our top baskets for absolutely FREE by opening a FREE StockBasket account.

Remember to invest in top quality stocks with StockBasket and hold them for at least 5 years to see the Magic of Compounding unfold!


Written by Deepika Khude | Update 19 Feb 2021


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