This document shows how systematic investments through SIP can yield better returns over the long term through the power of compounding. It provides an example where investing Rs. 500 per month for 3 years at a rate of 21% per year results in a total amount of Rs. 24,783.06. Historically, some mutual fund schemes have given over 25% annual returns on average over 10 years, though past performance is not guaranteed for the future. SIPs help reduce risk through rupee cost averaging and encourage a savings discipline.

1. Power Of Compounding - SIP Calculator
Systematic Investments have stood the test of time and the calculator below
will show you how a small investment made month on month can yield much better
returns over a long period of time.
1 Enter Amount of Investment per month in cell C14
2 Enter No. of years you would like to invest in cell E14
3 You can view the amount you would receive at the end of the period in Cell I 29
Amount (Rs.) Rate p.a.* Years Months
500 21% 3 36
1+i 1.02
(1+i)^n 1.87
(1+i)^n-1 0.87
((1+i)^n-1/i) 49.57
Amt*((1+i)^n-1/i)
Amt*((1+i)^n-1/i)
Assumption: 15% is what the sensex has grown at since its inception in 1980 when it started with 100 points
which is also a reflection of corporate ernings growth
Other Notes: Historically over the last 10 years*, some MF schemes have given returns in excess of 25% CAGR
SIPs absorb market volatility, exhibit a compounding force and inculcate a sense of Savings discipline
in the individual, thereby act as a WEALTH BUILDER tool in the long run
Disclaimer: Investments in MFs/ Equity are subject to market risks
Past performance may/may not be sustained in the future
* EXCLUDING LAST ONE YEAR
If we include last one year for ten year calculations it still is about 18%plus

2. Total amt. invested over the period
18000
24783.06
25,216.77
it started with 100 points
in excess of 25% CAGR
sense of Savings discipline

3. *Assumti
on that
the Rate
of
Return
is 15%
p.a.beca
use that
has
been the
average
rate of
return
that the
market
has
generate
d in the
past 10
years
and
Corporat
e India
also is
expecte
d to
grow at
a similar
rate in
future.