Mutual funds are a commonly used investment option for individuals planning long-term financial goals. They allow regular contributions, are professionally managed, offer access to market-linked returns, provide diversification, and are suitable for a wide range of risk preferences. However, the true growth of an investment over time depends on more than market performance or fund selection. One critical factor that influences the final outcome is compounding.
Discussed below is how compounding works, how its impact can be measured using a compound interest calculator, and what steps can help you make the most out of it.
