• 4 AUG 2017

    Understand the power of compounding

    Understand-the-power-of-compounding

    Saving money helps your wealth grow arithmetically. Investing helps it multiply. However, investing over longer periods and ploughing back all investment income helps your wealth grow exponentially. That is what compounding is all about.

     

    About compounding

    When you reinvest your investment income (interest, dividend) and let this income earn you more income, it is called compounding.

     

    Study this table:

     

     

    Amount Invested in Rs.

    1,50,000

    1,50,000

    1,50,000

    1,50,000

    1,50,000

    Investment Period

    5

    10

    15

    20

    25

    Rate of Return (in %)

    8

    8

    8

    8

    8

    Interest Earned (Rs.)

    72,037

    1,78,668

    3,36,510

    5,70,153

    9,16,003

    Total Returns (Rs.)

    2,22,037

    3,28,668

    4,86,510

    7,20,153

    10,66,003

    *Compounded half-yearly

    As is evident, over a longer term, compounding can return spectacular returns; it can make small amounts grow into a sizeable corpus.

    There are various options available when it comes to investment like Fixed Deposits, Mutual Funds, ULIPs, etc. To profit from compounding, you need a long-term product; you also need to retain your investment income (and not withdraw it).

    One such long term plan is ULIPs. ULIPs are market linked insurance products with an option to choose and switch between equity to debt funds not only helps you profit from compounding, it also provides you with a life cover and tax benefits to fulfill your wealth generation needs.

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  • 13 OCT. 2017

    Get a Comprehensive Life Insurance Plan for Your Family this Diwali

    While tangible gifts form an important part of the rituals between parents and children for the festive season, some intangible gifts hold a deeper value.

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