FROM 1 GRAIN TO 92 LAKH TRILLION: THE MIND-BLOWING POWER OF COMPOUNDING!

One grain of rice becomes 92 lakh trillion!

Sounds crazy right?

In a distant kingdom, long ago, there lived a wise Sadhu, known far and wide for his wisdom and knowledge of the mystical arts.

One day, he was invited by a prosperous king who had heard tales of his intellect and wanted to test his wisdom in a game of chess. The Sadhu agreed and proposed a humble reward: he would ask for just a single grain of rice for the first square of the chessboard, doubling it for each subsequent square.

The king chuckled at the modest request, thinking it inconsequential. After all, a mere grain of rice on the first square, two on the second, four on the third… what harm could that do?

The king readily accepted, never realizing that he was about to witness the magic of compounding.

As the game progressed, the humble request began to morph into something monumental. By the time they reached the 10th square, the Sadhu’s reward stood at over 500 grains, which still seemed manageable. But as the chessboard filled, the numbers began to grow explosively. By the 32nd square, the king owed the Sadhu two billion grains of rice.

And by the time they reached the 64th square, the total owed was an astonishing 92 lakh trillion grains of rice—enough to feed his entire kingdom for generations!

So, how do we use this for wealth creation?

We need to remember two things:

1st, how much % of your capital are you investing?

Imagine someone gives you an idea promising 100x returns.

But if you only invest a small sum—say, ₹100—the impressive multiplier doesn’t amount to much. ₹10,000 is not insignificant, but it might not be enough to change your life.

Real impact in wealth creation comes from allocating significant resources.

When compounding works its magic, the returns on a large investment can be truly transformational. Consider setting aside a reasonable portion of your income for investments, balancing it wisely with your living expenses. By allocating a meaningful sum to long-term investments, you allow compounding to work on a larger base, producing much more substantial results over time.

2nd, it's not about timing the market. It's about time in the market.

One of the biggest misconceptions in investing is the belief that success depends on the perfect “timing” of the market—buying low, selling high. The truth, however, lies in the steady, disciplined approach of remaining invested over time, allowing compounding to work its wonders.

Consider the difference in returns from compounding at different rates over the long term.

If you earn a 15% return annually instead of 7%, the difference after just a year or two may seem modest.

However, extend this over a 20-year period, and the corpus with the 15% return grows to nearly four times.

The story of the chessboard reminds us that even small beginnings can lead to significant outcomes. We don’t need to start with massive investments, but consistency is the key.

Remember, for magical compounding, allocate Big & focus on Time in the market!

Warm Regards,

Mohit Beriwala

CFA, FRM