Compounding is when your investment returns start earning returns of their own, so your money grows on top of its past growth — slowly at first, then dramatically.

It's the engine of long-term wealth. The longer you stay invested, the more powerful it becomes, because each year's growth joins the base that grows next year. A handy rule (the Rule of 72): at a 12% return, money roughly doubles every six years. Starting early matters more than starting big.

In Pakistan: compounding works on any reinvested return — from mutual funds, stocks, or other growth assets.

Example (PKR): Rs 5,000 invested every month at an assumed 12% return could grow past Rs 11 lakh in 10 years — an illustration based on an assumption, not a promise or guaranteed return.

Don't confuse it with: simple interest, which pays only on your original amount with no growth-on-growth.

Related terms: Inflation · Mutual fund
Where you'll meet this: How to start investing · How much money to start investing