The magic of compounding: How to make the most of your investment

Compounding means that the initial returns that you earned on an investment becomes part of the invested capital

What is power of compounding?

Compounding takes place when the interest generated on the principal in the first period is added back to the principal in order to calculate the interest for the following periods. Usually, the word “interest" is used to refer to the returns generated by a fixed-income instrument like a Fixed Deposit (FDs). But the workings of compounding is not limited to FDs. It includes all other investment where the returns earned in the previous year is reinvested in the following years. The biggest advantage of compounding is that it takes the time value of money into