SIP (Systematic Investment Plan) allows you to invest a fixed amount regularly in mutual funds, benefiting from the power of compounding and rupee cost averaging.
Where: P = Monthly investment, r = Monthly interest rate (annual rate ÷ 12 ÷ 100), n = Total number of months.
Imagine you invest ₹5,000 every month for 10 years (120 months) in a mutual fund that gives a 12% annual return. By the end of 10 years, you would have invested ₹6,00,000 out of your pocket. However, thanks to the power of compounding, your money will have grown to approximately ₹11.6 Lakhs!