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Karunakar
1% BetterĀ ā¢Ā 6m
"Success is not the key to happiness. Happiness is the key to success. If you love what you are doing, you will be successful." ā Albert Schweitzer Topic: Compound Interest ā The Game Changer in Wealth Building Imagine two friends, Raj and Priya. Both are 20 years old, and each decides to start investing ā¹10,000 every year. But here's the catch: Raj invests from age 20 to 30 (10 years) and then stops, leaving his investment to grow. Priya starts at age 30 and invests the same ā¹10,000 every year until she turns 60 (30 years). Who do you think ends up with more money at age 60? The Power of Compound Interest Compound interest is interest earned on both the initial principal and the accumulated interest from previous periods. It's like a snowball rolling down a hill, getting bigger and bigger. Raj's Investment: Total investment: ā¹10,000 x 10 years = ā¹1,00,000 Assuming an annual return of 10%, his money grows for 40 years without any further contribution. Priya's Investment: Total investment: ā¹10,000 x 30 years = ā¹3,00,000 Her money grows for only 30 years. When we calculate, Raj ends up with more money than Priya, despite investing less! This demonstrates the value of starting early. Priya and Raj lived in a small town and wanted to retire rich. Priya thought she could wait until she earned more, but Raj understood the value of starting early. While Priya was buying the latest gadgets, Raj focused on investing. When they turned 60, Priya was shocked to see Rajās wealth far surpassing hers, even though he had stopped investing years ago. She realized that time is the most valuable asset in building wealth. Follow Our Medium blog for Finance and Business insights like this: https://medium.com/@FoundrBite
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