What is Compounding and Why Should You Care? Compounding is the process where your earnings (returns or interest) start earning more returns over time. It’s "growth on growth", where your money multiplies, not just adds up. • ₹1 lakh earning 10% annually = ₹1.10 lakh next year • In 20 years: Becomes ₹6.72 lakh (thanks to compounding!) • Wait 30 years? It becomes ₹17.45 lakh! • Delay by just 5 years and you could lose lakhs
The ₹5,000/Month Journey — What It Really Looks Like?
If you invest ₹5,000 every month in a mutual fund with an average annual return of 12%, here’s how your wealth could grow: In 10 years, your investment of ₹6 lakhs could become ₹11.6 lakh. In 15 years, ₹9 lakh invested could grow to around ₹18.4 lakh. By 20 years, ₹12 lakhs could become ₹34.9 lakh. In 25 years, it can reach around ₹67.3 lakh. Stick with it for about 27 years, and you’re looking at a ₹1 crore portfolio.
Why Many People Miss Out?
People pull out of their investments mid tenure, be it for buying a gadget or for a wedding. This breaks the flow of the process. Compounding needs only 1 important thing which is time. In the early years, it might feel like nothing’s happening. But if you hold on, the curve shoots up. Out of the final ₹1 crore, nearly ₹85 lakhs are generated in just the last 10 years. This is where wealth explodes. That’s why people who stay invested always end up ahead.
How to Maximize the Power of Compounding?
Start now, even if it’s just with ₹2,000. Stay invested no matter what. Increase your SIP as your income grows. Ignore market noise. Just keep going. Don’t touch the money unless it’s really important.
Conclusion
More Than Just Money: Compounding isn’t just about becoming rich. It teaches patience. It rewards discipline. It gives people with average income a chance to create extraordinary wealth, without needing to be a finance expert. You don’t have to earn more. You just have to invest smarter and earlier. ?5,000 a month might not feel life-changing today. But if you trust the process, it can completely transform your future.