Albert Einstein supposedly called compound interest the eighth wonder of the world. Whether he said it or not, the principle is undeniably powerful — and most people dramatically underestimate how much time matters compared to rate of return.
Two investors: same money, different start times
| Investor A | Investor B | |
|---|---|---|
| Starts at | Age 25 | Age 35 |
| Monthly SIP | ₹5,000 | ₹10,000 |
| Return | 12% | 12% |
| At age 60 | ₹3.24 Crore | ₹3.49 Crore |
| Total invested | ₹21 Lakhs | ₹30 Lakhs |
Investor B invested ₹9 lakhs more but only barely beat Investor A — because A had 10 extra years of compounding. Start at 25 with ₹5,000 and you nearly match someone who starts at 35 with ₹10,000. This is why starting a SIP today — even a small one — matters so much.
The rule of 72
Divide 72 by your annual return rate to know how many years it takes to double your money. At 12%, your money doubles every 6 years. At 7% (FD), it takes 10.3 years. Over 30 years, 12% gives you 5 doublings (32x). 7% gives you only 3 doublings (8x). See this in action: ₹5,000 vs ₹10,000 SIP over 25 years.