“Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it” – Albert Einstein
Initially, this statement may appear to be an overstatement, but the mathematical calculations supporting it prove otherwise. Allow me to present a fascinating illustration: Imagine you possess a sum of Rs 5 crore at the age of 50 and your investment is growing at 12% return then as per Rule of 72, your money will double every 6 years.
It is possible to increase your wealth to 10 crores in six years from now. You can set aside 5 crores of this amount to cover all of your living expenses. Every six years, the remaining 5 crores will double in value.
When you turn 62 years old, your wealth will total 10 crores. As you progress to 68, it will double to 20 crores. Moving forward to 74, it will grow to 40 crores. Upon reaching 80, your wealth will soar to 80 crores. By the time you turn 86, it will reach an impressive 160 crores. This extraordinary financial growth only requires an additional 5 crores to secure the future for all your generations to come.
So, what will happen with the surplus? You can either use it to benefit society, or the government will disperse it later. This demonstrates the power of compounding, a concept that is sometimes underestimated.
Key Takeaways
A. Ensuring Financial Stability: Through strategic management and wise investments of a significant starting amount, people can ensure their financial stability and create a comfortable lifestyle for both themselves and their loved ones.
B. Creating a Meaningful Impact: Harnessing surplus wealth to bring about a positive change in society allows individuals to make a profound and enduring impact that surpasses mere monetary wealth. By doing so, they contribute to the progress of future generations and address the societal requirements.
C. Recognizing the Power of Compound Growth: Understanding the principle of compounding emphasizes the importance of strategic long-term financial planning and prudent investment strategies, showcasing the significant opportunity for wealth accumulation that arises from consistent saving and investing.
Happy Reading & Happy Investing!!!
Viralkumar Shah (Certified Financial Planner CM – USA, Financial Happiness & Wellness Coach)
Author – Financial Planning Sahi Hai! – Keep Your Life Organized