Power of Compounding is known as the world’s eighth wonder, in today’s topic, we are about to talk about what is Power of Compounding.
And what can we benefit from using it, and why it is known as the eighth wonder.
On this post
Power of Compounding –
Albert Einstein has said – Compound interest is the eighth wonder of this world. Who understands it, finds it (EARN). And who does not understand it, it pays (PAY).
What is POWER OF COMPOUNDING?
By POWER OF COMPOUNDING we mean,
When we make a lot of profit on our money using COMPOUND INTEREST
For Power of Compounding, we have to invest INVEST back to the long-term benefit of Compound Interest on our money.
And in this way, according to our financial goals and predetermined times, we have to continue investing as long as we do not receive “a huge amount of money” according to our financial goals.
Like – 10 thousand to 10 million
Yes, 10 thousand rupees can be made in 30 years by using Power of Compounding investment. It’s amazing
let’s see how 10 thousand to 10 million can be made?
For this, you have to invest 10 thousand rupees with a 36% annual compound interest rate.
And investing every year to get the compound interest back together in the last total capital and continue investing for 30 years.
And in this way, you will see that only 10 thousand rupees will get a profit of 36% compound interest and 10 million in 30 years.
In the same example if there was a simple interest
So we get the total profit = 10000 thousand every year 36% = 3600
And for thirty years 3600 every year means total – 3600 x 30 = 108000 and original amount 10 thousand
In this way the total amount will be – only 1 lakh 18 thousand
So, friends, this is the difference between compounding and Simple Interest investment.
Despite everything being alike, how big is the difference.
Time also 30 years and INVESTMENT’s AMOUNT also 10 thousand
But the difference was, using COMPOUND INTEREST instead of using SIMPLE INTEREST.
10 thousand rupees, time 30 years and 36% per annum, according to the simple interest – 1 lakh 18 thousand
10 thousand rupees, time 30 years and 36% according to the compound INTEREST – 10 million
Now you think yourself
What kind of benefits do you want to earn on your investment? Simple interest or compound interest?
I think your answer will be – just and just compound INTEREST.
Use of compounding
You can use Power of Compounding to complete any of your LONG TERM GOAL. And you can create as much WEALTH as you want.
You have to think about how much money you want in the LONG TERM.
And once you know the RATE of COMPOUND INTEREST needed to meet your financial goals. So whatever AMOUNT you have today you have to do regular and disciplined investment for a sufficient time at the rate of that compound interest.
And in this way you definitely-
You can make as much money as you want by using the POWER OF COMPOUNDING.
POWER OF COMPOUNDING – World’s Largest Unique
Robert Kiyosaki wrote his book Rich Dad Poor Dad referring to Power of Compounding-
“One of the greatest wonders in all the wonders of the world is” The Power of Compounding “
And further mentioning a real incident is said-
The purchase of Manhattan Iceland of America is considered to be one of the greatest deals in this world. The entire NYYORK (New York) city was sold for just $ 24 in this transaction.
Yes, this world’s largest and wealthy city was sold in just 24 dollars for only 24 dollars.
Many will consider this a joke and many will wonder how this big city of this world was sold for only $ 24.
But, Robert Kiyosaki has said that by adding this phenomenon to “Power of compounding”, you might be more surprised by what you have said.
He further stated that
This deal came about at the end of the seventeenth century i.e. 1695.
And at the same time in today’s time, it would seem foolish to think of the city and its 24-dollar deals on one side.
But you pay attention, that if that $ 24 was invested at the rate of only 8% of the compound interest, then the price of that 24
Maybe you should take some time to read this number,
But pay attention, it is only 8% of the time, the compound interest.
And if you talk about a bit more interest rate, then this number becomes very big so that Newyork city can be bought again by using the same $ 24 today and Power of compounding.
And after that there will be so much money left that another city of America can also buy Las Vegas.
So this is special thing – of Power of Compounding.
You must have come to some idea about its power.
And that is why Albert Einstein said that now you can understand why this great scientist of this world said such a thing.
Who understands the power of compounding earns money. And who does not understand, he loses money.
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