Compounding is powerful, but only for those who give it time. Many investors understand this in theory, yet miss out in practice by selling too early. A simple example makes this clear. Imagine two investors, Amit and Rahul. Both invest ₹1 lakh in the same quality stock growing at 15% annually. Amit stays invested for 20 years. Rahul, however, sells after 10 years, feeling satisfied with the gains.
After 10 years, both Amit and Rahul have about ₹4 lakhs. Rahul exits and moves the money elsewhere. Amit does nothing — he simply stays invested. Over the next 10 years, something remarkable happens. Amit’s ₹4 lakhs continues to compound at 15%, growing to nearly ₹16 lakhs by year 20.
Rahul made a “profit,” but Amit built wealth. Rahul earned ₹3 lakhs in gains. Amit earned ₹15 lakhs — five times more — without making any extra investment. This is the hidden cost of selling early. The biggest returns don’t come in the first few years — they come later, when compounding accelerates.
Markets will always test patience. But investors who resist the urge to sell good businesses early allow time to do the heavy lifting.
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