The Power of Compounding: How to Make Your Money Grow Over Time

in this space of money there are plenty of ways to grow and compounding is one of finest way to do only if you understand the whole concept and use it wisely.

I have learnt the concept of compounding in hive over the period of time seeing the growth of money I've realized it's real power in this finance space one shouldn't underestimate as it can have good impact.

The way it grows money over the time and this concept is something we'll understand ahead in this from Personal experience and point of view.

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What is Compounding?
Compounding is basically related to earning interest or returns we get over a period of time and than that adds into total amount to compound more.

Like let's suppose I have 100 Hive staked means 100HP and in a month interest I earned is 20hive, now after compounding that 20 Hive Goes into staked and becomes 120 > now total value is 120 > next interest amount will be higher and the next one will be higher and so on.

_{Image by PublicDomainPictures from Pixabay}

In this process of compounding you're actually increasing the stake and putting more into total amount to accumulate more and this increase the growth overall.. it does add a constant growth.

But is that too easy?

Compounding with Fiat in Banks or Savings account

There are banks that offers little more like 2% interest APR on savings account and it compound over the period of time.

The one I know here offer to keep "5k, 10k or so on" in bank account and every month it will add up like 20rs or depend on how much your total savings is.

So, that 20rs is like nothing and fiat money over the month gets devalue means not good enough for long term compounding and that's why I've completely avoided this thing.

Well, this is how I'm applying compounding as of now.

How to Make Your Money Grow Over Time within Hive ecosystem

In Hive there are plenty of ways connected with one other firstly it's "HP" than comes "HBD" after that we have "Layer 2" compounding system.

Now the thing is from just HP based compounding whatever we curate and Gets 50% back, it's add up into our total stake and so each and every small amount I claim adds up like that and make total stake grow constantly.

Than the HP we delegate to other stakeholders gives payout that adds up into total stake.

![]![] _{Image by Megan Rexazin from Pixabay}

Now We have HBD savings where APR is 20% and we get interest payout after 30 days so every month when you compound it just add up more in the total and it increase the chance of growing your stake over the period of time.

With Layer 2 Tokens options on hive I've chosen $LEO and on every LPUD I power up to increase the total stake so my curation value increase and while curating others it gives curation rewards that I compound automatically.

The Risk vs Risk Free Compounding

The Compounding of interest or amount comes with certain risks and rewards depends on the ecosystem and your asset.

If that's your local fiat currency means fiat and in some banks than the only risk is your money might get devalue and have less value in coming time than now even after compounding which makes it meaningless in my opinion.

In digital assets the risk is picking up a protocol or ecosystem to compound interest like there's a platform that offers 10% APR to stake your USDT and it goes bankrupt due to unsolvency. Your fund is Gone, all lost! UST is a live example of this.

So, sticking to a legit protocol or ecosystem where you can continue to compound without any stress doesn't have much risk is better choice imo.

Hive is an Ultimate example here from years people are in this ecosystem compounding and growing their money while we've seen tons of platform became worthless and went bankrupt.

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Wrapping Up...

In the end, compounding does help to build a sustainable long term wealth for your long term goals remaining discipline is the way.

I hope you got this whole concept cleared now and I myself had learned from hive. So, would love to know your thoughts in the comment section.

Fin.

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_{Thanks for reading.Greetings.}

All the content and images are mine except indicated. No copyright infringement intended. 22/06/2023.