Power of compounding is the important reason why one should start investing in SIPs
Compounding is about earning interest by reinvesting the interest earned. Suppose you start investing Rs 1,000 every month in an equity scheme to meet a goal that is 10 years away. If your investment generates 12% returns, you would get Rs 2,32,339 at the end of 10 years.
Many investors are on a start and stop mode of investing. They start investing when there is optimistic mood all around them. And they stop their investment when there is pessimism around them. SIP puts an end to this improper practice.