Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Compound interest is interest calculated on the initial principal plus accumulated interest from previous periods.
Your money earns returns, and those returns also earn returns over time — that snowball effect is compounding, the engine of long-term wealth.
Compounding frequency (daily, monthly, quarterly) affects effective yield. In mutual funds, daily NAV compounding applies. Rule of 72 approximates doubling time: 72 ÷ rate ≈ years to double.
₹1,00,000 at 8% compounded annually becomes ₹2,15,892 in 10 years. Simple interest would yield only ₹1,80,000 — a ₹35,892 difference from compounding.
A = P × (1 + r/n)^(n×t)Each SIP instalment grows independently. Early instalments compound longer, which is why starting SIPs early dramatically increases final corpus.
Divide 72 by your annual return rate to estimate years to double money. At 12% return, money doubles in about 6 years.
PPF interest is compounded annually, credited at year-end based on the lowest balance between 5th and last day of each month.