What is Compounding ?

First of all let me explain how compounding works for you …. We know compounding helps your money grow exponentially … so , what is compounding anyway ?

In layman term , compounding is an interest over interest + capital , ( that’s how most Ah Long’s make their money !! : )

Example of a compounding effect on your Rm500 , with a yearly interest of 10 % compound for 5 years. Meaning , you deposit your Rm500 , in a investment vehicle that promise a 10% return consistently over a period of 5 years.

Did you see the magic ? Your money have grown 1.6 times over a period of 5 years. Now what have you done ?.....simply hold and wait. ( A strategy inspired by Warren Buffet , buy & hold forever ) Lets see , if we left our investment compound over 30 years … at the age 55 ( assume your age is 25 now ) , you will end up with Rm 8724 … is that wonderful …your money have grown to a whooping of 17.5 times ………


Now you know why , Albert Einstein called compounding the 8th wonder of the world …..