Generations have been advised constantly about how saving can create a huge safety net for our future. How can compounding help you truly take advantage of savings?
Why are savings so substantial?
Savings is your income, not spent. It is the part of your income that you keep aside after all obligations have been paid.
While there are many saving benefits, a few substantial ones are –
- Savings keep your money safe
- They give you a steady rate of interest through Fixed deposits
- Inculcate financial discipline
- As we mentioned earlier, it creates a safety net for our future.
The value of your savings keeps decreasing every year!
Inflation is a general rise in the price level of an economy over time, and no one can defeat inflation through savings alone
What if we told you that there is a better alternative to just savings?
Compounding.
What is compounding?
Compounding or compound interest by definition is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It results from reinvesting interest rather than paying it out so that interest in the next period is then earned on the principal sum plus previously accumulated interest.
Compounding is a percentage increase in assets over a certain calculated period.
Compounding is an investors’ best friend and compares building wealth through interest to rolling a snowball down a hill. “Start early,” Buffett said. “I started building this little snowball at the top of a very long hill.”
Warren Buffet, when asked about his secret of wealth management.
| Years | 10% | 20% | 30% |
| Year 1 | 11000 | 12000 | 13000 |
| Year 2 | 12100 | 14400 | 16900 |
| Year 3 | 13310 | 17280 | 21970 |
| Year 4 | 14641 | 20736 | 28561 |
| Year 5 | 16105 | 24883 | 37129 |
| Year 6 | 17716 | 29860 | 48268 |
| Year 7 | 19487 | 35832 | 62749 |
| Year 8 | 21436 | 42998 | 81573 |
| Year 9 | 23579 | 51598 | 106045 |
| Year 10 | 25937 | 61917 | 137858 |
| % Return | 259.37% | 619.17% | 1378.58% |
Most people think investing in the stock market is risky, if done right can be advantageous.
You skip the setback of saving by increasing your savings through compounding.
If you do not have experience or the time to invest, you can always hire an investor after a detailed background check.
If you are still concerned about letting someone else manage your wealth and want to invest in your own but don’t know what to buy and when to sell, you can use apps like the Cycle app.
The Cycle app will help you compound your wealth the best way possible, helping you make more profits and save losses. It gives you free BUY and SELL signals and enables you to increase your wealth by helping you make profits and save losses. You can choose from over 2500 stocks and add them to your watchlist.