Compounding explained with a pencil and paper

Imagine you put ₹1,000 somewhere that grows by 10% a year. This is a made-up rate, used only to show the idea.

• After year 1: ₹1,000 + ₹100 = ₹1,100
• After year 2: the 10% is now on ₹1,100, so ₹110 is added = ₹1,210
• After year 3: ₹121 is added = ₹1,331

The extra ₹10 and ₹21 are growth earned on earlier growth. That is compounding.

The rule of 72

A quick estimate: divide 72 by the yearly growth rate to get the years needed to double. At an imaginary 8%, 72 ÷ 8 = about 9 years.

What it teaches

1. Start early. A small amount held for longer can beat a larger amount held briefly.
2. Be regular. Adding a fixed amount each month builds the habit more than guessing the "right time".
3. Watch the costs. A small yearly charge compounds against you too.
4. Inflation matters. Real growth is growth minus rising prices.

Real investments can rise and fall, and past performance does not guarantee anything. Use our calculators to experiment with the arithmetic. This is education, not advice.