Mika
VIP Contributor
Let’s say you invested in Tesla stocks when it was $500 and when the stock reached $700, you sold your stocks. You made profits from this investment. What are you going to do with this money? If you spend it, will you be able to improve your finance? Certainly not, you need to continue to reinvest. The better approach is to reinvest all the profits you received from your Tesla stocks. This is called compounding. When you are reinvesting your profits and building your principal amount (number of stocks in this case), you are basically compounding your profits.
There are a lot of benefits of compounding and the most obvious one is it will help you build your portfolio. Since you reinvesting your profits, you are building your investment.
The second benefit of compounding is you will be able to build your wealth. Your worth will be more when you start compounding.
When you compound, you do not have to invest from your pocket. You are basically investing the money you made from your previous investment.
Compounding will also help you to become rich. Since you are always reinvesting, your wealth will continue to build and in the long run, you will become rich.
There are a lot of benefits of compounding and the most obvious one is it will help you build your portfolio. Since you reinvesting your profits, you are building your investment.
The second benefit of compounding is you will be able to build your wealth. Your worth will be more when you start compounding.
When you compound, you do not have to invest from your pocket. You are basically investing the money you made from your previous investment.
Compounding will also help you to become rich. Since you are always reinvesting, your wealth will continue to build and in the long run, you will become rich.
