Magic of Compounding

“Compounding is the eighth wonder of the world.”
- Albert Einstein

Small things leads to big things in life.. and that's very true.
In real life we ignore the importance of small savings which we can make.
let me give you an example
let me take example of my Friend Sandra. He use to have one packet daily of Classic mild. That cost around Rs.50 per packet.

Daily expense=Rs.50
yearly expenses=Rs.50*365=18250

now let us assume he invest this amount for next 25 years:

Instrument Return
Bank 7%
Nifty 15%
Equity 20% (we have to assume.. but these are rational assumptions)
Mutual fund 30% (we may assume.. they do meet their target)
after 25 years:
Bank 18500*{(1.07)^25-1/.07}=Rs.11 70 107
Nifty 18500*{(1.15)^25-1/.15}=Rs.39 36 670
Equity 18500*{(1.20)^25-1/.20}=Rs.87 31 650
M.F. 18500*{(1.30)^25-1/.30}=Rs.4 34 42 861

That's the magic of compounding.. imagine mere Rs.50 per day could fetch you Rs.4.5 crores after 25 years.
Now, i dont think i need to tell.. what we can do with 4.5 crore.. Atleast this is the thing everyone can do...[thinking about ferrari ;)]

Imagine we took the example of meagre Rs.50. We spend more then that...isn't it?

All this looks really easy.. but you sincerely need to make an effort to make it large.


If i give you example from my own life..
In my library i use to return my books after due date,my fine was just Rs.5.. i use to think i can easily pay Rs.25-30 in return i can keep the book..but librarian did not collect anything..i was more happy.. i use to keep books for more longer time.... immediately before exam.. we need to clear-up account.. i had to pay Rs.750. At that time i felt bad as that amount had quite bigger impact on my pocket.
That day i learned

regular saving+earning on savings=a big amount(really big..isn't it??)