People often hear about the power of compounding, but many don't fully understand its impact on wealth creation. This is where the best mutual fund services in Kolkata come to the rescue. With the right guidance, investors can leverage compounding to grow their investments significantly over time. How Does Compounding Work? The basic idea behind compounding is reinvestment. When you invest in a mutual fund, the returns you earn are reinvested to generate more returns in the future. This creates a cycle of growth, where your initial investment continues to multiply over time. Let’s look at a simple example: ● Suppose you invest ₹10,000 in a mutual fund that gives a return of 10% per year. ● In the first year, you earn ₹1,000 in returns, bringing your total to ₹11,000. ● In the second year, you earn 10% on ₹11,000, which is ₹1,100. ● Now, your total investment is ₹12,100, and the cycle continues. Each year, the returns earned are added to the principal, allowing you to ear...
Comments
Post a Comment