Getty ImagesDo we need to do anything extra to get benefit of compounding? So I have a monthly SIP of Rs 5,000 for 10 years so do I have to do anything extra or after 10 years I'll get the benefits of compounding by default?
---- Sanket Kandolkar
Answered by Shifali Satsangee, Founder, Funds Ve'daa, a mutual fund advisory firm, based in Agra:
The power of compounding is considered the eighth wonder of the world. To get additional benefits you could step up or top up your SIP every year by a certain percentage, say 10%, or a certain amount ( whatever you are comfortable with).
To give an example,
If you do a monthly SIP of Rs 5,000 for 10 years, your corpus at the end of 10 years would be approximately Rs 10 lakh assuming a 10% CAGR.
If you do a monthly SIP of Rs 5,000 for 10 years and top it up by even a Rs.1,000 every year, your corpus at the end of 10 years would be approximately 17.5 lacs assuming a 10% CAGR.
This would give you a fair idea of the benefits that accrue along with the power of compounding just by stepping up your SIPs every year.
---- Sanket Kandolkar
Answered by Shifali Satsangee, Founder, Funds Ve'daa, a mutual fund advisory firm, based in Agra:
The power of compounding is considered the eighth wonder of the world. To get additional benefits you could step up or top up your SIP every year by a certain percentage, say 10%, or a certain amount ( whatever you are comfortable with).
To give an example,
If you do a monthly SIP of Rs 5,000 for 10 years, your corpus at the end of 10 years would be approximately Rs 10 lakh assuming a 10% CAGR.
If you do a monthly SIP of Rs 5,000 for 10 years and top it up by even a Rs.1,000 every year, your corpus at the end of 10 years would be approximately 17.5 lacs assuming a 10% CAGR.
This would give you a fair idea of the benefits that accrue along with the power of compounding just by stepping up your SIPs every year.
(If you have any mutual fund queries, message us on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.)
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