Beginner's Guide to Compound Interest & SIPs

Compounding is the process where an investment earns interest, and then those interest earnings earn interest themselves. Over long horizons, this cycle generates exponential growth.

Step 1: Start Early

Because compounding relies on time, starting just 5 years earlier can double your final portfolio balance. Time does the heavy lifting, not just the principal amount invested.

Step 2: Systematic Contributions (SIP)

A Systematic Investment Plan (SIP) involves committing a fixed monthly amount. This averages out market purchase prices (cost averaging) and instills disciplined savings habits.