Compounding Effect

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From 3MB to 100TB: The Power of Exponential Growth!

In the 1950s, IBM introduced a *3.5 MB* hard drive. By the 1960s, storage capacities had grown to a few dozen megabytes. In the 1970s, they reached *70MB*. Even in the early 1990s, hard drives only ranged from *200MB to 500MB*. But then, things took off exponentially:

*1999*: Apple’s iMac featured a *6GB* hard drive  

*2003*: The iMac offered *120GB*  

*2006*: The new iMac came with *250GB*  

*2011*: The first *4TB* hard drive was launched  

*2017*: *60TB* hard drive  

*2019*: Storage reached a staggering *100TB*  

As *Morgan Housel* points out, from *1950 to 1990*, storage increased by just *300MB*. But from *1990 to today*, it has grown by over *100 million MB*! Even the most optimistic predictions in the 1950s might have guessed storage would grow *1,000 times*, or maybe *10,000 times*— *but 30 million times*? No one could have imagined it.

That’s the power of exponential growth!

Now, let’s apply the same concept to investing.

Suppose you invest *₹1,00,000* with an average annual return of *14%*, which is reflective of the Sensex's historical performance. Here's how your wealth grows over *45 years*:

Compounding

- **Year 0**: ₹1,00,000   

- **End of Year 5**: ₹1,93,484   

- **End of Year 10**: ₹3,86,743   

- **End of Year 15**: ₹7,50,255   

- **End Compounding of Year 20**: ₹14,59,024   

- **End of Year 25**: ₹28,28,117   

- **End of Year 30**: ₹55,46,180   

- **End of Year 35**: ₹1,08,47,427   

- **End of Year 40**: ₹2,12,61,030   

- **End of Year 45**: ₹4,18,49,088   

Now, observe the real magic of compounding:

In the *first 15 years*, your investment grows to approximately ₹7.5L.

In the *next 30 years*, it doesn’t just add another ₹7.5L—it adds around *₹4.11 crore*, reaching over *₹4.18 crore*!

This highlights the profound effect of time and compounding in wealth creation. 

Wealth creation may start slow, but patience leads to extraordinary results!

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