Long term investing

Month	Carried	This Month	Balance
1	0	100	100
2	101	100	201
3	203.01	100	303.01
4	306.0401	100	406.0401
5	410.1005	100	510.1005
6	515.2015	100	615.2015
7	621.3535	100	721.3535
8	728.5671	100	828.5671
9	836.8527	100	936.8527
10	946.2213	100	1046.221
11	1056.683	100	1156.683
12	1168.25	100	1268.25

The power of compounding is an amazing act. One needs to understand it very well before investing money in any sort of instruments.

One tends to look at short term gains while investing without actually understanding the power of compounding which comes attached to a long term investment plan.

Building wealth can not happen overnight. You need to give your money a good time to grow. This has to be coupled with consistent investing of your savings over regular period.

An example can only help you understand this concept better. In this example, I assume that you invest US$100 each month in a area (say stocks) which can give you just 1% returns per month.

This shows at just 12th month you have accumulated 68.25$ on your investment. If I now make this table grow to 120 months (10 years), the accumulation amounts to 23003 USD, at 240 months this grows to 97847 USD and at the end of 30 years this grows to 3,49,500 US dollars.

Can you imagine how much this may grow if you increase your monthly investment to 250 and the monthly rate of returns to 1.5%?

It becomes $83,000 in 10 years, $5,64,000 in 20 years and $33,60,000 in 30 years.

What you say? Do some home work and start investing for long term.

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