Strategies of Compound Interest

 If You are very intelligent in real sense, you must save and invest the money for getting the benefit of compound interest. But in reality, large number of people know that bank and your business gives interest on interest and principal for double fast your money but they consume and never get benefit from free great force of the world for growing your wealth. So, from practically, we are telling the strategy which help you use compound interest.

1st Strategy : Save Your Interest 

If you get interest on your principal. Never consume it. Save it and then re-invest it for minimum 10 years 

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• ##check## This strategy will have following benefits
• If you save the interest, you can earn more interest than simple interest. If you save the interest for 35 years with the rate of 5%, you will save 2.5X of simple interest if you does not consume it. Never go monthly for getting interest and spend but collect it and reinvest in bank or your own business or real estate. 

for example you have deposited Rs. 1,00,000 for 35 years with 5%  and if you do not spend it, its compound interest will be 

Rs. 4,51,600

If you consume the interest at the end of year, you will get only simple interest which will be 

Rs. 1,75,000

With saving of interest, you will get more 2.5X = 451,600-175,000= 276600

Single Line Message : Never Spend Interest but save and invest for financial freedom

For a real-world example of how consistent saving and reinvesting helped me grow wealth, check out how I achieved Rs. 1 Crore net worth in 16 years before 45 here.

2nd Strategy : Start Early for Saving and Investment 

If you start early for saving and investment, you will get more compound interest because compound interest gets more time to hard work and with this you will grow more wealth

for example 

you start at the age of 25

suppose every month you save RS. 1000 and upto 60 years you save, it means, you have 35

@7%

invested amount = 420,000

Compound interest = Rs. 13,74,142

Total Value = 17,94142

Your friend starts at the age of 30 and your friend also save RS. 1000 and upto 60 years you save, it means, your friend have 30 years @ 7%

Invested amount

₹3,60,000

compound interest

₹8,57,300

Total value

₹12,17,300

You can see just loss 5 years of your saving and investment, you have lost 

Rs. 516,842

Single Line Message : Start early for saving and investment. 

3rd Strategy : Start Early Even Less Amount of Saving and Investment Give More Reward 

with Power of Compound Interest

Suppose, there are three friends

A

A starts at the age of 25 for saving and investment

save per month = Rs. 500

upto 65 years

@ 7% interest rate

total time of investment 

40 years

B

A starts at the age of 35 for saving and investment

save per month = Rs. 1000

upto 65 years

@ 7% interest rate

total time of investment 

30  years

C

A starts at the age of 45 for saving and investment

save per month = Rs. 2000

upto 65 years

@ 7% interest rate

total time of investment 

20 years

Now Check wonderful results of A, B and C compound interest

For A

Invested amount

₹2,40,000

Estimated returns

₹10,65,123

Total value

₹13,05,123

For B

Invested amount

₹3,60,000

Estimated returns

₹8,57,300

Total value

₹12,17,300

For C

Invested amount

₹4,80,000

Estimated returns

₹5,62,765

Total value

₹10,42,765

From above 

A gets compound interest ₹10,65,123 with Rs. 500 per month investment for 40 years

B gets compound interest ₹8,57,300 with Rs. 1000 per month investment for 30 years

C gets compound interest ₹5,62,765 with Rs. 2000 per month investment for 20 years

So, winner is always slow but long

Single Line Message : Start slow because you will never tired and you will win. 

Reason behind this

is Inflation

Today Rs. 1 value is always more than after one year Rs. 1 value.