Written by - What is Compounding? Compounding refers to earning interest on both the initial principal and the interest that has been added to it.
- The Rule of 72: The Rule of 72 helps you estimate how long it will take for an investment to double based on its annual rate of return.
- Start Early: The earlier you start investing, the more your money can compound over time, exponentially growing your wealth.
- Reinvest Your Earnings: To fully benefit from compounding, reinvest dividends, interest, and capital gains instead of withdrawing them.
- Patience is Key: Compounding works best over long periods. Consistently investing and allowing your wealth to grow over time is crucial to maximizing returns.
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