You know you are supposed to pay attention to money matters, but you don't.

Why?

Is it because the subject seems boring or intimidating to you?

It is never too early-or too late-to take control of your financial future. However, just like losing weight or giving up smoking, it's something you really have to do for yourself. The rewards, of course, are considerable.

Remember how your grandmothers were experts at saving and always had some money stashed away in some corner of the house to face any contingency? In the same way, women always have an inherent streak of savings and try to be prepared for contingencies.

Therefore, it is a good idea to gain grandmother's wisdom and carry on this tradition using the advantages that technology provides.

While following any financial option however simple or sophisticated it is, you need to understand some fundamentals while investing:

The 1st fundamental is the Power of Compounding

Analysts say 'Compounding is the eighth wonder of the world.'

Let us first understand, what is Compounding?

Compounding

Compounding just means that the money you make off an investment can be reinvested to make even more money than your initial investment.

In short, compounding is a process that allows interest to earn interest upon itself.

How does compounding work?

Base Amount
+ Earnings
= New base amount
+ Earnings
= New base amount
+ Earnings
= Value over time

What is Power of Compounding?

Power of compounding is a simple concept that means the longer and the more you invest, the higher the potential reward on your money, since your money compounds over time.

Study the following example.

For Rs. 1000 invested p.m. @7% p.a. till the age of 60:

If you start investing Rs.1000 at the age of 25, you will be able to save Rs.420000, and  that value at age 60 is Rs.18,11561, which is more than four times the corpus invested.