Power of Compounding: How much corpus you can create with Rs 5,000, Rs 10,000 & Rs 15,000 monthly SIPs in 20 years?

Discover how the power of compounding can turn Rs 5000, 10,000, or 15,000 monthly SIPs into substantial wealth in 20 years. Learn the impact of consistent investments and exponential growth.

ZeeBiz WebTeam | Nov 29, 2024, 01:53 PM IST

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The power of compounding is a game-changer for long-term financial growth. By reinvesting interest, even small, consistent investments can grow exponentially over time. Systematic Investment Plans (SIPs) make this process easy, allowing investors to contribute regularly to mutual funds. With Rs 5000, 10,000, or 15,000 monthly SIPs, you can create a significant corpus over 20 years. Dive into the potential returns and understand how compounding can help achieve your financial goals with disciplined investing and time on your side.

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning)

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Understanding the Power of Compounding

Compounding is a financial principle where interest earned is reinvested, leading to exponential growth.

It allows both the principal and previously earned interest to generate further returns.

Over time, compounding can amplify even small, consistent investments into significant wealth.

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Key Elements of Compounding

Reinvestment: Interest earned is added to the principal for future returns.

Interest on Interest: The reinvested interest also starts earning interest, creating a snowball effect.

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Types of Interest

Simple Interest: Earned only on the principal amount.

Compound Interest: Calculated on both the principal and reinvested interest, leading to faster growth.

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How Compounding Works Step-by-Step

Initial Investment: Start with a fixed amount.

Interest Earned: Accumulate returns over time.

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Reinvestment

Add interest back to the principal.

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Repeat Process

Continue reinvesting, leading to exponential growth.

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Role of SIP in Compounding

Systematic Investment Plan (SIP): Regular, small investments in mutual funds over time.

Helps reduce the financial burden of large one-time investments while maximizing returns.

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Corpus with Rs 5,000 SIP

Invested Amount: Rs 12,00,000 over 20 years.

Estimated Returns: Rs 37,95,740.

Total Value: Rs 49,95,740.

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Corpus with Rs 10,000 SIP

Invested Amount: Rs 24,00,000 over 20 years.

Estimated Returns: Rs 75,91,479.

Total Value: Rs 99,91,479.

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Corpus with Rs 15,000 SIP

Invested Amount: Rs 36,00,000 over 20 years.

Estimated Returns: Rs 1,13,87,219.

Total Value: Rs 1,49,87,219.

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Power of Compounding: How much corpus you can create with Rs 5,000, Rs 10,000 & Rs 15,000 monthly SIPs in 20 years?

Understanding the Power of Compounding

Compounding is a financial principle where interest earned is reinvested, leading to exponential growth. It allows both the principal and previously earned interest to generate further returns. Over time, compounding can amplify even small, consistent investments into significant wealth.

Key Elements of Compounding

​Reinvestment: Interest earned is added to the principal for future returns. Interest on Interest: The reinvested interest also starts earning interest, creating a snowball effect.