The Power Of Compounding: Building Wealth Through Market Cycles

In the world of investing, compounding is the cornerstone of wealth creation. It means earning money not only on your initial investment but also on the money you’ve already earned, leading to accelerated growth. Historically, equity has been one of the best-performing asset classes for long-term wealth generation. However, equity investing comes with ups and downs, with some years yielding significant returns and others resulting in losses. For instance, FY 2024 has been highly favourable for Indian equity investors. Despite rising inflation and increasing interest rates globally, equity investors achieved extraordinary returns. The Nifty Small Cap 100 index delivered returns of over 75%, the Nifty 500 yielded 42%, and Nifty 50 went up by 31%. These returns were achieved despite challenges such as global economic uncertainties and geopolitical risks. In contrast, FY 2023 was not...