Hello ILs 1. Can anybody explain me the power of compunding ? What is the difference between FD and RD? When we FD in a bank say for Rs.1 lakh at an interest rate of 8% for three years what amount will we get?How is it calculated? 2. Is it safe to invest in gold now? 3.
Power of compounding is a term used to indicate the 'interest on interest' you will get if you hold after 1 year. To put it simply if you take a FD for 3 years At the end of 1 year- you would receive interest on Principle At the end of 2 year- you would receive interest on Principle+ interest on 1st year interest At the end of 3 year- you would receive interest on Principle+ interest on 1st year interest+interest in 2nd year interest+ etc.. You can find the formula for compounding in the below link Compound Interest Formula