How long does it take to see the Power of Compounding?

Returns from Stocks:

Normally, it takes 10years for seeing the magic of compounding but the rationale for this is that we are assuming growth of 10–12% annually.

Einstein’s view about Compounding

Outlier Stocks:

There are some stocks that can duck this norm either compound faster

Example 1: Atul Ltd (Chemicals)
Performance of Atul Ltd. Stock
Performance:

If an investor had bought 20 stocks for INR ~37,600 in August 2016(5 years back), these stocks would be worth INR 1,81,736 in August 2021. (Dividends are not included)

Stock Return of 382.93%

Atul Ltd. Year-on-Year(Y-o-Y) Returns
Example 2: Hindustan Unilever (FMCG)

Performance of Hindustan Unilever Ltd(HUL) Stock
Performance:

If an investor had bought 20 stocks for INR ~17,261 in August 2016(5 years back), these stocks would be worth INR 47430 in August 2021 (Dividends are not included)

Stock Return of ~175%

HUL Year-on-Year(Y-o-Y) Returns

Strategy for Stock Investing

So the point is to buy good stocks and sit tight. The principal will bring in dividends and appreciation in value.

Value Investor Charlie Munger’s views about stock investing

Hope you find this helpful. Do share and subscribe if it has been able to bring clarity with regards to investing

Investing in the Stock Market

Happy Investing!

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