The miracle of compounding is a powerful concept in finance that can significantly impact your long-term wealth creation. Compounding is the process of reinvesting earnings on an investment to generate additional earnings over time. As you reinvest your earnings, the investment grows exponentially, leading to significant wealth creation over the long term.
The miracle of compounding is a powerful concept in finance that can significantly impact your long-term wealth creation. Compounding is the process of reinvesting earnings on an investment to generate additional earnings over time. As you reinvest your earnings, the investment grows exponentially, leading to significant wealth creation over the long term.
Systematic Investment Plan (SIP) in mutual funds is a popular investment strategy that utilizes the power of compounding. It involves investing a fixed amount of money at regular intervals, such as daily, weekly, or monthly, in a mutual fund or other investment vehicle. By investing regularly, you can take advantage of compounding, allowing your investments to grow over time.
One of the advantages of SIPs is that they enable investors to average out the cost of their investment over time, reducing the impact of market volatility. Additionally, by investing small amounts regularly, investors can develop a savings habit and build a sizable investment portfolio over time.
- Consider setting up automatic transfers from your checking account to your savings account each month. This way, you’ll save money without having to think about it. Do daily SIP of Rs. 100 if you are not discplined. Let’s understand the calculation of Rs. 100 daily savings in Mutual fund SIP.
Monthly Savings = Rs. 3000, Years of savings =20, Yearly Interest =14% ( Stock Market Returns in last 20 years)
Total Capital Invested = 7.2 Lacs
Total Returns after 20 Years = 39.5 lacs ( Small savings with disclpline can make wonders )
You can achieve your 1 Crore target by just investing 15000 Monthly for next 15 Years in mutual funds SIP. START NOW
| Duration | SIP Amount monthly (₹) | Future Value (₹) |
|---|---|---|
| 20 years | 3000 | 39.5 Lakhs |
| 5 years | 3000 | 2.6 Lakhs |
| 8 years | 3000 | 5.3 Lakhs |
| 10 years | 3000 | 7.9 Lakhs |
| 12 years | 3000 | 11.2 Lakhs |
| 15 years | 3000 | 18.4 Lakhs |
| 18 years | 3000 | 29.3 Lakhs |
| 20 years | 3000 | 39.5 Lakhs |
| 22 years | 3000 | 53 Lakhs |
| 25 years | 3000 | 81.8 Lakhs |
| 28 years | 3000 | 1.3 Crores |
| 30 years | 3000 | 1.7 Crores |
| 35 years | 3000 | 3.4 Crores |
Daily SIP returns are not common, as most mutual fund schemes require a minimum investment period of at least one month. However, even a monthly SIP investment can generate significant wealth over the long term, thanks to the power of compounding. mutual funds SIPs are an effective and flexible way to invest in the stock market and build wealth over time. They offer a disciplined and cost-effective approach to investing, while also providing diversification and rupee-cost averaging benefits.
In summary, the miracle of compounding is a powerful force that can help you grow your wealth over time. SIPs are a great way to take advantage of this, as they allow you to invest a small amount of money regularly and benefit from the power of compounding. While daily SIP returns can be calculated, it’s more important to take a long-term view of your investments and focus on building wealth over time.
