Albert Einstein once said, "Compounding is the 8th wonder of the world. He who understands it, earns it; he who doesn't, pays it." We all have read about compound interest in our school days, but do we have the knowledge, how it plays an important life in our life. With compounding, even common people can create wonder. If he/she applies it in the right direction or else it destroys anything in the same way. First, understand how it is playing an important role in our life. Case 1: If you put money in an asset that gives 10% (more than inflation), then you could make approximately seven times in 20 years. Case 2: If you put money in a bank which gives 3.5% (which is less interest than inflation: 6%) then after 20 years the purchasing power will become approximately halved. So, whether you do anything or not, it is going to impact the capital. Now, you must be curious to know about it, So let's start with the definition and the f...