How to quickly save Rs 1 crore? Use this 8-4-3 rule of compounding

While simple interest is calculated on the principal amount or the money you have invested, compound interest is calculated on the principal amount and the interest that you earn on that..

For instance, if you invest a lump sum of Rs 21,250 every month in an instrument that earns 12% interest per annum and is compounded yearly, you will get your first Rs 33.37 lakh in eight years...

So, if you get a 7% interest per annum (compounded quarterly) in such a fixed income product you may need to invest a higher amount of Rs 22,000 per month and the time of compounding will also change accordingly..

While you invest your money, it is important to take note of the frequency of compounding, especially when dealing with fixed income investments..

When you invest a larger sum of money, the frequency at which the interest is compounded will play a huge role in your returns..

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