However, if you start saving at the age of 35, you will be able to save only Rs.300000 (25% less) and the value of the amount invested at age 60 will be Rs.8,14,797, which is less than three times the initial amount invested.

Even in a 10 year gap there is a huge difference in the value of the funds saved and interest earned. That is the power of compounding, where your money earns money and multiplies only over a period of time.

The 2nd principle of Investing is Asset Allocation.

Asset allocation means diversifying your money among different types of investment vehicles, such as stocks, bonds and money market instruments.

The goal is to help reduce risk and enhance returns.

Establishing a well-diversified portfolio may allow you to avoid the risks associated with putting all your eggs in one basket.

Asset allocation is the key to wealth creation.

Having understood what these two concepts are, you can keep your focus when investing in any financial option.

Remember, think forward and built the compounding factor to give that extra returns. After all, it is a kick to pick up a nice dress you would have longed for but were not able to buy, with the extra money you get.