Wednesday, 11 July 2018

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Optimize Your Investment By Power Of Compounding

Everyone wants to invest his money for future safety. But they don’t use the best way of investment. How do you ensure that your investment work continuously for you and you reap optimal benefits?. If you have adopted the simple way to grow the money, that is not beneficial as well as that will be taken more time. So, the best way to use the power of compounding.

What is Compounding?

Compounding is the process, which helps to provide more benefit to the investor in short period. Every investor gets the benefit on his investment and that is called simple interest. This interest calculates for a year. 

Compounding interest provides benefit from the 2nd-year investment like this - 1st-year investment + Interest + 2nd-year investment + Interest. So, in that way, an investor get the interest on interest.

optimization, Investment, Compound Interest
CI Benefits For Investors

Compounding is working like the snowball. At first, it starts off small, and as it rolls on and picks up momentum, it grows in size consistently and provides a good result. 

Compounding reaches a substantially larger size than its original.

If you stay invested for the long-term or period, your investment can experience a growth momentum over time.

The best way of investment is to start as modest investments and as time passes that will increase little by little. This little addition makes your investment return more attractive and beneficial.

Working Process Of Compounding Interest

As discussed above, I would like to say that your investment (principal) earns returns or interest at a certain percentage. 

The process is - this return or interest gets added to your capital. Similarly, the process repeats itself, only this time the principal investment you start with is bigger, as it contains the interest generated.

The bigger block of money generates interest again. This is the beauty of compounding interest. That serves the benefit for investors every year from principle invested amount. 

That means every time the process repeats after the first time, you start with money that generates money to end up with more money and earning benefits.

Basic Rules Of Compounding

The best way to start your investment as earlier as possible. The earlier you start the more you will save. Second, the higher the rate of returns the more you can accumulate. 

The longer you save for the more pronounced the effects of compounding. This is fact and tips for an investor.

Final Conclusion

A good investor always tries to invest his money, where they can get more interest in short time. 

But it is only possible if they use the compounding interest. So, adopt optimize your investment by the power of compounding.

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