10, 15, 20 years- SIP of ₹10,000 and the magic of compounding- Know when you will reach ₹1 crore?
SIP Compounding: The power of compounding will be understood only when you start investing from a young age. The more time you give to your investment, the more benefit you will get.
Earning money is not an easy task. But, it is even more difficult to make money from that money. The investment comes in handy here. Still, you cannot achieve as much from investment as you thought. Then you look for where you will get more interest. In which product should you invest money? This is where the formula of compounding comes in handy. If you understand the power of compounding, then no one will be able to stop you from becoming rich.
Before investing anywhere, you must do financial planning. The sooner you start investing, the more benefit you will get. Investment should be for a long period. Let us know...
What is Compounding?
Compound Interest is taught in school during childhood. But, in reality, only an investor understands its power. To put it simply, the interest you get in investing is called Compounding. Along with the principal, you also get interest on its interest. Compounding is the best way to double or triple your investment.
SIP of Rs. 10,000 for 10 years
- Estimated return: 12% (annually)
- Investment period: 10 years
- Total investment: Rs. 12 lakhs
- Total value of SIP: Rs. 23 lakhs
- Profit: Rs. 11 lakhs
SIP investment of Rs. 10,000 for 15 years
- Estimated return: 12% annually
- Investment period: 15 years
- Your total investment: Rs. 18 lakhs
- Total value of SIP: Rs. 49.96 lakhs
- Profit: Rs. 31.96 lakhs
SIP investment of Rs. 10,000 for 20 years
- Estimated return: 12% annually
- Investment period: 20 years
- Your total investment: Rs. 24 lakhs
- Total value of SIP: Rs. 98.93 lakhs
- Profit: Rs. 74.93 lakhs
The longer the investment, the greater the benefit of compounding
Power of Compounding You will understand this when you start investing from a young age. The more time you give to your investment, the more benefits you will get. Compounding will be more on investing for 20-25 years instead of 5-10 years.
