How to become Rich | The power of compounding
Hello friends , Everyone wants to earn money and become rich . I want to tell you , how to become rich by using “ The Power of compounding Principle “
I want to tell you a practical example that how Power of compounding works ?
Suppose there are two bags , first bag contains 100 lacs rupees and second bag contains one rupee coin which doubles everyday up to 30 days .
Now you have to choose anyone bag , believe me most of the people will choose first bag . But people who know the power of compounding will choose second bag which contains one rupee coin . Now I would like to show you how much rupees one rupee coin become after 30 days . On second day coin becomes two rupees , 3rd day become Four rupees , 4th day 8 Rs. , 5th day 16 Rs ….so on . After 30th days this will become more than 53 crore rupees . This is the power of compounding .
Now I want to tell you how to become rich by investing . Most of the people heard about share market , stock exchange . Stock Exchange is a place where stocks can be sell and purchased . But most of the people have a fear in their mind by investing in share market . Most of the people think that investing in share market is like a gambling . That means it is very risky to invest in stock market . That’s why most of the people do not take interest to invest in stock market , they think bank is safe so they are more interested in fixed deposit (F.D) .
Now I would like to tell you if you think that your hard earned money gain better return then you should invest in stock market through Mutual funds . Mutual fund is safe because it is regulated by SEBI (Securities & Exchange Bord of India) .
What is Mutual Fund ?
Mutual Funds are the group of investments which contains Gold , Stocks , Bond , Real State etc .
The company that manages mutual funds are called Asset Management company . The company hire many experts & they manages their money very wisely . They never put their money in a single portfolio . They put their money in diversified portfolio . Due to diversified portfolio , if they have some losses in one portfolio , there will be some gain in other portfolio and losses can be overcome .
Warren Buffett Says that “ Don’t put all your eggs in one basket ” , that means you should invest your money in diversified portfolio .
If you want to be rich then you should learn about money . You should talk about money .
Quantity vs Quality :
Always choose quality funds which have four to five star ratings .
Short Term vs Long Term Goal :
If you want to better return then always plan for long term investment .
Diversifications:
Never put all you money in single portfolio , be diversified .
Don’t be greedy :
Don’t be too greedy about returns , always see the company background before investment . Who is running the company , what is their goal , which types of business they do etc . After knowing this in & out you should invest .