The greatest scientist Albert Einstein once said that the most powerful force in the universe is Compounding. However, we humans underestimate the Power of Compounding, and whether you are aware or not, compounding always works either for you or against you. Those who understand it - earn it, those who don't - pay it!
Let's understand from a few examples:
- If you eat junk food daily, nothing going to happen the next day, next week, or next month, but after a few months/years, you can clearly observe the changes in your health.
- If you waste your time today and every following day, nothing is going to happen tomorrow but after a few years, you get your result - going to fail for sure.
- If you waste your money day & night, you end up losing all your money eventually.
- If you take a Home Loan for +20 years, you end up paying more interest than the principal you owned.
- If you are exercising today, you won't get your body in shape tomorrow but after a few months, you would be more physically fit & active.
- If you are planting a tree today, after a month you won't get anything in return but after some years, it is filled with fruits, flowers, leaves, provide shadow & protection.
- If you are productive today, you are not going to succeed tomorrow but year after year one-day success would come to you, for sure.
- If you create trust and maintain it daily, it would become your brand & goodwill.
- If you invest today, you are not going to be rich tomorrow, but after a few decades, you would be wealthy and achieve financial freedom.
- A small investment via SIP won't get you rich in the next 3, 5, or 10 years but after 15-20 years of continuous investments, you get compounding results.
- Howcome to any employees create crores of rupees just by simply contributing to EPF for 35-40 years, whereas most of the investors fail to generate even a small profit via mutual fund SIP?
What do you think about whether compounding is working in your favor or against you?
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