Wednesday, November 05, 2014

SIP it slowly



If you believed in the truthful statement "Compounding is your friend",  then you need to believe and embrace another beautiful truth  "SIP it slowly".  It is not about any hot beverage, but investing systematically for long term.  There are numerous articles on SIP (Systematic Investment Plan) in the internet world.  The main benefits of SIP being
  • Introduces disciplined investing
  • Can invest smaller amounts as per ones convenience 
  • No need to worry about timing the market
  • Average costing the purchase price due to market fluctuations
  • Compounded returns
Highlighting  just last point "Compounded returns" in combination of  SIP would give wonderful perspective if we see results at a glance. Below table shows 1000/- invested in monthly SIP route for various duration and rates of interest combination.  First row shows total amount invested for that duration; Second row shows duration in years and first column shows rate of return.



Same result is show in graphical format below.





As you can interpret, the gap between two interest lines increases at faster pace as duration increases.  So start investing early in SIP route and avail the benefit of compounding.



1 comment:

WealthCare India said...

Very nice informative blog and thanks for sharing the best information about systematic investment plan