Power of exponential growth

 RAM and SHYAM both get two offers from the king of United Compoundland.

Each of them gets to choose only one.

Offer A: They can start getting 1 paise on day1, that will compound to double every day till the next 30 days.

OR

Offer B: They will start getting 100,000 ( 1 lac ) every day, till the next 30 days.

Without a second thought, SHYAM picked offer B. He knew that 1 paise will never be 30 lacs in 30 days.

RAM had to choose OFFER B. He was not very happy though.

Anyway, our story starts “compounding”.

 

Day1: 1 paise

Day2: 2 paise

Day3: 4 paise

Day4: 8 paise

Day5: 16 paise

Day6: 32 paise

Day7: 64 paise

Day8: Rs 1.28

Day9: Rs 2.56

Day10: Rs 5.12

Day11: Rs 10.24

Day12: Rs 20.48

Day13: Rs 40.96

Day14: Rs 81.92

Day15: Rs 163.84

Day16: Rs 327.68

Day17: Rs 655.36

Day18: Rs 1310.72

Day19: Rs 2621.44

Day20: Rs 5242.88

Day21: Rs 10485.76

Day22: Rs 20971.52

Day23: Rs 41943.04

Day24: Rs 83886.08

Day25: Rs 167,772.16

Day26: Rs 335,544.32

Day27: Rs 671,088.64

Day28: Rs 1,342,177.28

Day29: Rs 2,684,354.56

Day30: Rs 5,368,709.12

 

RAM and SHYAM were flabbergasted to see how 1 paise compounded and outpaced lacs in just 30 days.

Conclusion :

You should stick to a long-term strategy of saving and investing, partly because it allows the power of compounding to do much of the heavy lifting as you build wealth. “An average investor with a longer time horizon is going to have better results than an amazing investor with a shorter time horizon.

Taking advantage of compounding is relatively easy: Start as early as possible, make regular contributions, and avoid tapping your account if you can avoid it. That will help you stay on track to meet your future goals.