Due to the power of compounding, long-term investments have the potential to grow significantly over time. When you invest in a company's stock and hold it for several years, you can earn some returns on your investment, and then those returns start making more returns.

Over time, this process builds up and can result in a large amount of money. This is called compounding which creates a snowball effect, and it's a key reason why long-term investments are the real way to become rich.

Why Historical Performance Matters in Stock Valuation?

When evaluating a company's stock, looking at its historical performance is important in understanding its potential. Past performance shows how the company has handled different challenges like market changes, economic shifts, and competition. If a company has grown steadily over the years, it might mean it has strong leadership and a good business.

At FinEstimator, we provide a graphical visualization that shows how ₹1 Lakh invested in a company 10 years ago has grown or fallen over time. This easy-to-understand graph helps you see if the company has been growing or facing problems, so you can make better decisions about investing in it. Also, it can give an idea of why you should keep your money invested for a long time in the stock market.

But remember, just because a company did well in the past doesn’t mean it will do well in the future. Because stock markets are dynamic, and many factors can influence future stock prices. So, you must check this information with other stock analysis methods before deciding to invest.