THE POWER OF COMPOUNDING EFFECT
"COMPOUNDING EFFECT IS THE EIGHT WONDER IN
THE WORLD
HE WHO UNDERSTAND IT....... EARN IT .
HE WHO DOESN'T NO ..... PAY IT."
WHAT IS COMPOUNDING ?
COMPOUNDING IS THE PROCESS WHERE BY INTEREST IS CREDITED TO AN EXISTING PRINCIPLE OF AMOUNT AS WELL AS TO INTEREST
ALREADY PAID
COMPOUNDING IS THE MULTIPLYING OF AMOUNT TWICE
SO THIS IS THE SECRET FOR MR.WARRREN BUFFER (3rd RICHEST PERSON IN THE WORLD)
COMPOUNDING EFFECT = CHOICE + BEHAVIOR + HABIT + TIME
The compounding effect is a powerful force that can greatly benefit investors in the share market over the long term. Compounding refers to the process of reinvesting the returns of an investment back into the same investment. In simple terms, this means that you earn returns not just on your original investment, but also on the returns generated by that investment.
Overall, the compounding effect can be a powerful strategy for investors in the share market. However, it requires patience, a long-term perspective, and the discipline to reinvest returns rather than taking profits and spending them.
In the share market, the compounding effect can be achieved by reinvesting dividends or by holding onto stocks for an extended period of time and allowing them to appreciate in value. Over the long term, even small returns can compound significantly and generate substantial wealth.
For example, let's say you invested $10,000 in a share that returned an average of 10% per year. After one year, your investment would be worth $11,000. If you reinvested the returns by buying more of the same share, your investment would grow to $12,100 after the second year. Over time, this compounding effect can generate significant wealth
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