How SIPs Ride The Power of Compounding

23 Feb 2023

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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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    The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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