The power of compounding
Payal Sharma Monetary Economics The power of compounding is a fundamental concept in finance and investing that refers to the ability of an asset's earnings to generate additional earnings, which are then reinvested to generate even more earnings over time. Compounding can significantly boost the growth of an investment portfolio, especially when the earnings are reinvested rather than withdrawn. Compounding can turn even modest savings into substantial wealth over time. It's important to note that compounding works both ways, so it's crucial to choose investments wisely and to monitor them regularly to ensure they're on track to meet your financial goals. Initial Investment: The initial capital one starts by investing a certain amount of money, into an investment vehicle such as stocks, bonds,…