It is said that if you want to make money, then make a habit of investing. Remember one thing in the matter of investment you must include long-term schemes in your portfolio. The longer you invest in these schemes, the more money you will make because, in the long term, you get the benefit of compounding. Know what is the Power of Compounding and in which schemes you can get its benefit.

Know what is the Power of Compounding

Interest is available in two ways. Simple Interest and Compound Interest. In simple interest, you get interest only on the principal amount for a certain period. But in compound interest i.e. compounding interest, you get interest on the principal amount as well as its interest, due to which your investment doubles and triples rapidly. A huge fund can be raised through compounding interest in the long term. Know in which schemes you will get its benefit.

PPF

Any Indian citizen can invest in the Public Provident Fund. It is considered an old and safe means of saving tax and investing. You get the benefit of compounding in long-term investment in PPF. Currently, PPF is getting up to 7.1 percent interest. Investment can be made in PPF for up to 15 years. But you can continue your investment for the coming years by increasing it in blocks of 5-5 years and can add a good amount. If 1.5 lakh is deposited annually in it and the scheme is extended and run for 25 years, then you are sure to become a millionaire.

SIP

Investment is made in mutual funds through SIP and you can make this investment in installments. The longer you invest in SIP, the better you will be able to take advantage of compounding. Investors who do not want to take much risk by investing money directly in stocks in the market can invest in SIP with less risk. The estimated annual return on SIP is considered to be up to 12 percent. Sometimes it can also be up to 14 and 15 percent. The longer the SIP, the bigger the profit. You can also collect funds worth crores through long-term SIP.

EPF

EPF is also a better investment option for employed people. This is a retirement scheme that secures your old age. You also get the benefit of compounding interest in EPF. Also, the interest received on this is more than other savings schemes. Currently, interest is being received on PF at the rate of 8.25%. You can contribute only 12 percent of the basic salary and dearness allowance in EPF. But through VPF you can increase this contribution.

VPF

EPFO also allows you to choose the option of VPF. Through this, you can increase your contribution to PF. Employees can invest up to 100 percent of their basic salary and dearness allowance in VPF and can add a good amount of money in the long term. VPF also gives the same interest as EPF, that is, you can get 8.25% interest on this investment. Along with this, you can also avail the tax benefits of EPF.

FD

If you want to take advantage of compounding interest by depositing a lump sum amount, then you can invest in a fixed deposit. This is considered one of the safest investment schemes. FD can be started anywhere in the bank or post office. The interest rate on it is also different at different places. You can decide where to invest after looking at the interest rates at various places.