Compounding is often called the eighth wonder of the world, and the idea behind the praise is simple: once your money starts earning returns, those returns start earning their own returns, and the snowball grows faster the longer it's allowed to roll.
Here's a concrete sense of how this plays out. ₹1 lakh invested at 10% a year becomes ₹1.1 lakh after year one — ordinary growth. But by year ten, you're not earning 10% on ₹1 lakh anymore; you're earning 10% on roughly ₹2.6 lakh, because every year's gains have been quietly added to the base earning the next year's return. The growth in later years dwarfs the growth in early years, purely because there's more accumulated base to grow from.
Why time matters more than timing here: trying to pick the "perfect" moment to invest is famously difficult, even for professionals, and the attempt often costs more in missed time than it gains in better entry points. A modest amount invested early, left alone, usually beats a larger amount invested later trying to find the ideal moment — because the early investment simply had more years for the snowball to build.
The practical takeaway: the specific return rate or the perfect entry point matters far less than simply starting and staying invested. If you're waiting for the right moment to begin investing, that wait itself is the biggest cost — compounding needs time above almost everything else, and time spent waiting is time that snowball never gets back.