What Is Compounding? How Does It Works? (#25)

Compounding is such a thing which have helped millionaires & even billionaires to grow their wealth.

Today, I'll try to explain y'all 'bout what compounding actually is....

how does it works....

how is it helpful for us....

etc. , etc.

So let's quickly start off with what is Compounding?

Compounding AKA Snowball Effect is such a thing which TAKES TIME BUT once it's up with the results.... it's just overwhelming. In short, it is the outcome of the time & effort which have been put in.

(Seems kind of really off topic definition but it's really what it is.... IN REALITY!)

It'll make more sense within a while!

So this UN—CLEAR definition brings us to....

How Does Compounding Works?

[So, to make y'all understand What Compounding Is (as per the definition).... we'll have to know How Does It Works?!]

Ok!

So now forget everything for now & focus here.... & answer me!

If you are given $1 Million all at once, OR if you are given $1 today which'll be doubled for 31 Days.... Then what'll you choose among the 2 Options?

Option—1: Getting $1 Million

Option—2: Getting $1 whichll keep on COMPOUNDING for 31 Days & then you'll get the final amount.

Hurry Up!

LEAVE YOUR ANSWER IN THE COMMENTS.... Option—1 OR Option—2 !

C'mon! HURRY UP!

Hmmmm....

So what did you choose?

I know many of y'all might have choosen Option—1.... & nevermind. I get it!

You know, $1 MILLION all at once!!!!

SIMPLE, EASY & $1 MILLION.

It's pretty obvious especially at the very first glance.

BUT you might haven't just looked deep enough into Option—2.

Let's take a moment looking into that, now....

So this is the 31-Days Progress & just wait, relax & watch.... the POWER OF COMPOUNDING!

Day 1 = $1

Day 2 = $2

Day 3 = $4

Day 4 = $8

Day 5 = $16

Day 6 = $32

Day 7 = $64

Day 8 = $128

Day 9 = $256

Day 10 = $512

Day 11 = $1,024

Day 12 = $2,048

Day 13 = $4,096

Day 14 = $8,192

Day 15 = $16,384

Day 16 = $32,768

Day 17 = $65,536

Day 18 = $131,072

Day 19 = $262,144

Day 20 = $524,288

Day 21 = $1,048,576

Day 22 = $2,097,152

Day 23 = $4,194,304

Day 24 = $8,388,608

Day 25 = $16,777,216

Day 26 = $33,554,432

Day 27 = $67,108,864

Day 28 = $134,217,728

Day 29 = $268,435,456

Day 30 = $536,870,912

Day 31 = $1,073,741,824

& this is Option—2.

It's So SURPRISING!

& this pretty dictates what the SNOWBALL EFFECT is!

You see, it was very slow in GROWTH in the very beginning but soon it went up rapidly.

Well, that's what Compounding basically is all about.

& to the one's who went with Option—1.

Don't be ashamed.... Don't bother overthinking.... There's no need to worry 'bout anything! You know, you are just a beginner.... who's learning stuff right now.... so it's pretty obvious!

So this means that there is no such thing as OVERNIGHT SUCCESS.... in REALITY!

It's just one's efforts which he/she have been putting in for months & even years & all of a sudden their hardwork COMPOUNDS & shows up with the BESTEST RESULTS!

& this outcome is somewhat also the result of one's patience & in short dedication!

This is what a Graph of Compounding looks like....:

Results don't show up early, but later on it's effect is way more fast & overwhelming!

(Slow to rapid growth!)

& ofcourse, Compounding doesn't just works in terms of Money. Instead it can be used to improve almost every part of one's life.

For Example— To stay fit....

you can; Exercise Daily, Go On A Diet, Etc., Etc.

& ofcourse we don't see results within a week BUT if we keep on following the diet & exercising then the results will obviously show up.... as soon as within 4 to 6 months.

All it requires.... is some time, effort.... & patience + dedication, ofcourse!

Not a fitness expert.... just saying! & giving an example!

So there are some sayings about Compounding/Snowball Effect from a very well known & famous personality.

Einstein once said, "Compounding is the 8th wonder of the world!"

Did You Know?

Compounding Is The Most Powerful Force!

Einstein also said that, "The One Who Understands Compounding,

Earns It

The One Who Does Not,

Pays It!"

So I hope you might have understood 'bout, What Compounding Is All About!

I won't say if this article best explains 'bout Compounding.... b'coz according to me Snowball Effect is explained the best in the story which was once heard & re-told by the most successful investor, Warren E. Buffett.

Haven't heard of that story?

Don't worry!

I'll cover that story in one of my article which explain "How Does COMPOUNDING Works In Investing?"

As I said Compounding can be used to improve almost every part of our life!

So it do works in Investing, as well, in some way.... to find out.... make sure to STAY TUNED!

& if you have something to say.... Leave A Comment!

Thanks For Reading!

Comments

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