The Power of Compounding and Its Role in Wealth Accumulation

Abstract

The power of compounding is a fundamental financial concept that has helped millions of individuals grow wealth over time, often with minimal risk when applied correctly. This paper explores how compounding works, why it is effective, and the various ways it contributes to the process of wealth accumulation. It emphasizes the significance of starting early, maintaining financial discipline, reinvesting earnings, and allowing time to do its work. Additionally, the paper discusses how compounding fits into broader financial strategies and personal investment planning while addressing behavioural challenges that hinder its optimal use.