I am sure you have heard about simple interest and compound interest.
If you have 1 lakh in cash and if you deposit it in a bank, you will get interest out of it.
Let’s say you are getting 7% interest on fixed deposit and you are withdrawing it every year.
If you do this for 30 years, your total money accumulated would be 3.1 Lakhs.
The principal of 1 lakh would have remained and you would have earned a total of 2.1 lakhs in interest over 30 years.
You would have got a interest of 7,000 every year.