TIME is the most important factor in wealth creation !! – Katalyst Wealth

Reading Time: 2 minutes

Follow Katalyst Wealth on Twitter | Article Source link

Dear Investor,

We have often talked about the power of compounding and the logic defying results that it is capable of producing. Let us today look at the actual formula for Compound Interest and dissect it.  

The Formula: A = P (1 + R/100)^t

A – Final Amount, P – Principal Invested, R – Rate of Return, t – Time  

Now, the aim is to increase our A (overall wealth) by increasing P (amount invested), R or t

The most common mistake that most investors make is that they focus way more on improving the Rate of Return or the Principal invested while the most important factor is clearly Time.  

Source: prudent investor

Look at how, even at 14% growth rate, Mr. Das’s overall corpus of Rs 39.34 lakh is still lower than Mr. Agarwal’s corpus of Rs 39.95 lakh at much lower return of 8%.   

  • An increase in Time can increase the Amount exponentially while an increase in Rate of return or Principal will only have a linear effect.
  • It is much simpler to increase Time by starting early than trying to increase Rate of return by taking riskier trades.
  • The two are not binary. There is no harm in trying to increase the Rate of return or the Principal; however, you can do it just as well even when you increase Time by starting early.

To conclude, Start Saving as soon as possible. Time is of essence here and the sooner you start your investment journey the more likely you are to achieve your financial goals. 

 

Also Read on FinMedium:  #034 – Who’s waving the red cloth?

If you are looking for Low Risk Strategy for investing in potential High Gainer Stocks, you can subscribe to premium memberships Alpha or Alpha + HERE

 

Best Regards,

Archit Mehrotra

Follow Katalyst Wealth on Twitter | Article Source link

Disclaimer: The opinions expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of the FinMedium or its members. The presentation of material therein does not imply the expression of any opinion whatsoever on the part of the FinMedium concerning the legal status of any company, country, area, or territory or of its authorities. For more info. please read our ToU & Privacy Policy here. If you have any concerns regarding this post, please reach out to us at finmedium@gmail.com

Every Wednesday and Saturday, we send Info-Graphic and FinMedium Weekly Digest newsletters to our 25000+ Subscribers.

Join Them Now!


katalyst Wealth

katalyst Wealth

Founded by Ekansh Mittal (SEBI Registered Research Analyst), focused on small/mid cap stocks for own investments and stock reports for clients.
Please Share Now :)