POWER OF COMPOUNDING
“The power of compounding is the Most Powerful Force in the Whole Universe. Those who understand it – Earn it. Those who don’t – Pay it.”
— Albert Einstein
I. A Simplified Instruction
| Initial Investment Rs. 10 Lakhs | Bank Fixed Deposit | Gold | NIFTY / SENSEX | Good Investment | Great Investment |
|---|---|---|---|---|---|
| Annual rate of return Growth every 10 years |
6–7%* 2x |
10–12%* 3x |
13–15% 4x |
~20% 6x |
~25% 10x |
| After 10 years After 20 years After 30 years |
20 Lakhs 40 Lakhs 80 Lakhs |
30 Lakhs 90 Lakhs 2.7 Crores |
40 Lakhs 1.6 Crores 6.4 Crores |
60 Lakhs 3.6 Crores 21.6 Crores |
1 Crore 10 Crores 100 Crores |
* These are typical rates earned by FD and Gold over last 20-30 years.
Figures in Rupees, and gross of inflation
II. Historical Returns by Sensex in 10-Year Intervals
| May 1979 | Apr 1989 | Apr 1999 | Apr 2009 | Dec 2024 | |
|---|---|---|---|---|---|
| Sensex | 100 | 780 | 3,326 | 11,403 | 78,014 |
| Previous 10 years return | 22.8% | 15.6% | 13.1% | 13.2% * | |
| Since Inception | 590 times in 44 years | 15.8% | |||
| Vs Gold: 65 times in 44 years | 9.9% | ||||
| Vs Bank: 16 times in 44 years @ 10-year yield | 6.5% | ||||
| *15% year period | |||||
III. India to Continue to Generate Superior Returns Over the Next 20–30 Years
Growth Engine of the World, Regaining her Pride
1. Democracy: World’s largest, fast growing and well-managed
2. Demography: Young and Ambitious; Growth to continue for several decades
3. Domestic Demand: Entrepreneurial; Hungry to consume; High savings rate
4. Digital: Global Best-in-class; Increasingly more power to the masses
5. Dignity: Respect across the world; Attracting capital and talent
6. Drive: Large scale, high impact reforms continue; Thrust on Infrastructure