The Power of Compounding- In Life

The power of compounding is always synonymous with Investments. Compound interest is the interest calculated on the initial principal, which also includes all of the accumulated interest from the previous periods. Exponential growth is the result of letting interest compound over time. “The rule of 72” is also based on Compound interest.

Generating “interest on interest “is known as the power of compound interest. In simple terms there is a benefit of “interest on interest “, it can also be mentioned “Snowball Effect”. Albert Einstein has mentioned the Compound Interest as the 8th Wonder of the world. And one of the powerful forces in universe, He who understands it ‘earn it’ and he who doesn’t ‘pays it’.

In real life context “The sooner the Better “. The beauty of this statement is that it applies even in understanding the concept of Power of Compounding. You will benefit from the principal if you understand it earlier in life.

In real life it applies to almost everything. From learning words to exercising to daily rituals to eating habits …………etc. In-fact it can be both bad and good effects. Like investments, in real life also the power of compounding applies when there is consistency. In learning we do it consistently we will get the benefit of power of compounding. So, it is not about the intensity but consistency.

If we understand the power of compounding earlier in life, it can have a good impact on our entire life cycle. While we teach the concept of Compound interest in Mathematics, we should also teach our younger generation the impact of it in our daily life.

In our life if we are able to “Replace “our habits with “Good Rituals “we all will definitely benefit. Once I understood the power of compounding, I started replacing my habits with good rituals and I have benefited exponentially.

As Albert Einstein mentioned “He who understands it earn it, he who doesn’t pays it”