The compound interest for a given amount is calculated using both the principal and the interest earned over time. This is main distinction between compound and simple interest.
It allows investors to earn interest on their investments and reinvest the money, earning further income over time.
In SIP, investors should invest a fixed amount every week, month or quarterly for a long period to get compounding interest benefits.
A mutual fund calculator can help you locate the best mutual funds and track their growth over time.
Withdrawing money from SIP in the short term will not provide you full benefits of compounding interest.
However, SIP investment makes you a regular investor but if you are going through some financial issues, you can adjust the amount as per your budget.
A regular investment in SIP till your retirement age can still give you a huge amount in 25 years.
Suppose you start investing Rs 5,000 per month at 25 age and do this till 60. This way, you can accumulate Rs 3,89,71,614. This includes Rs 25,20,000 invested amount and estimated returns (12% per annum) of Rs 3,64,51,614 on your investment.
Suppose you start investing Rs 6,000 per month at 30 age and do this till 60. This way, you can accumulate Rs 2,11,79,483. This includes Rs 21,60,000 invested amount and estimated returns (12% per annum) of Rs 1,90,19,483 on your investment.
Suppose you start investing Rs 6,000 per month at 35 age and do this till 60. This way, you can accumulate Rs 1,13,85,811. This includes Rs 18,00,000 invested amount and estimated returns (12% per annum) of Rs 95,85,811 on your investment.
Investing in mutual funds is subject to market risks. Consult your advisor before making any investment.