How SIPs Ride The Power of Compounding
23 Feb 2023
How SIPs Ride The Power of Compounding
The power of compounding has been called among other things – the eighth wonder of the world. When used intelligently, compounding can add considerable value to your investments, particularly via the SIP route (systematic investment plan).
The illustration below helps us understand the corpus built over a period of time assuming INR 5000 is invested monthly and the expected rate of return is 12 %
| SIP | 5 years | 10 years | 20 years | 30 years |
|---|---|---|---|---|
| Amount invested | 30,000 | 6,00,000 | 12,00,000 | 18,00,000 |
| Expected Corpus | 4,12,432 | 11,61,695 | 49,95,740 | 1,76,49,569 |
How to make the most of compounding
- Continuity- Investment amount may be small but will help built in significant corpus over a period of time.
- Early mover Advantage: Starting early is most important to avail compounding benefits.
- Optimum Return- Always consult your financial advisor while investing through SIP route to have the right asset allocation in generating an optimum return.
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