21/02/2016
Ignore this & you ignore the most important lesson of finance you will ever learn in your life: Compounding
Consider the investment behavior of two friends, Ramesh and Suresh.
Ramesh starts investing Rs 10,000 every year at the age of 25 and stops at the age of 35, but does not withdraw.
Suresh starts investing Rs 10,000 every year at the age of 35 and continues till he’s 65 years old.
Who do you think will have more money when they are both 65?
As crazy as it may sound, Ramesh will have 2.5 times the amount Suresh has (1.28 Crores vs 46.5 lakhs), even though Suresh invested for 20 years more.
What happened in this case is that for Ramesh, money started compounding early, and earned interest, which in turn generated further interest, and this goes on. This is the true power of compounding.
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