Compounding and SIPs

Compounding is earning returns on your returns. Over long periods it becomes very powerful.

A simple picture

₹10,000 growing at 10% a year:

• After 1 year: ₹11,000
• After 10 years: about ₹25,900
• After 20 years: about ₹67,300

The money grows faster later because each year’s growth is bigger.

The rule of 72

Divide 72 by the yearly return to estimate how long money takes to double. At 12%, about 6 years.

SIPs

A Systematic Investment Plan puts a fixed amount into a mutual fund every month. You buy more units when prices are low and fewer when they are high (rupee cost averaging), and you build the habit.

Time beats timing

Starting 5 years earlier often matters more than picking the perfect moment.