Sumit Kumar

The power of compounding refers to the ability of an investment to generate earnings that are reinvested to generate additional earnings over time. The concept is based on the principle that the earlier you start investing and the longer you stay invested, the greater your potential returns can be. Even small, regular contributions can grow into substantial amounts over the long term due to the power of compounding Let's take an example: two Persons, A and B, start investing at the same time. A decides to invest Rs.1,000 per month for 10 years, while B chooses to invest Rs. 2,000 per month for 5 years. Both investments yield an annual return of 8%. At the end of 10-year, A's investment would have grown to approximately Rupee1.81 Lakh. However, B's investment, despite having contributed more initially, would have reached around Rupee 1.47 Lakh. The key difference lies in the extra time A had for his investment to compound and grow steadily over the years. To make the most o

SIP stands for Systematic Investment Plan. It is a way of investing in mutual funds, where you invest a fixed amount of money at regular intervals, such as weekly, monthly, or quarterly. SIPs allow investors to invest in a disciplined manner and benefit from the power of compounding that helps investors to build wealth over the long term. Benefits of investing in SIP: Disciplined Investing: SIP instills financial discipline as investors are required to invest a fixed amount of money at regular intervals. This helps inculcate the habit of saving and investing regularly, which is essential for achieving long-term financial goals. Rupee Cost Averaging: In SIP, investors buy units of mutual funds at different prices. This results in the averaging of the cost of units over time, reducing the impact of market volatility on the investment. This means that investors buy more units when the market is down and fewer units when the market is up. Power of Compounding: Compounding is the process