Somebody explain how SIP works? I am unable to find the answer !

POSTED BY lucky10101 ON October 20, 2013 1:32 pm ONE COMMENT

Hi Friends, this may be a simple question to ask but couldnt understand the below concept in SIP

(a) Power of compounding

(b) Rupee average cost

Please some one provide me link or explain with example.

Lets say in case of Bank FD after each year we get interest and that interest is added to principle amount and that becomes the new principle amount on which the next interest is calculated this is what the power of compounding i understand but how does the power of compounding works in SIP

I will be happy if someone clears my doubt.

Thankyou

One reply on this article “Somebody explain how SIP works? I am unable to find the answer !”

  1. ashalanshu says:

    Dear Lucky, instead of answering you directly, I’m giving a basic home work to you to understand the power of compounding.

    HDFC Top 200 fund was launched with a NAV of 10 Rs. in 1994. Now check it’s current NAV and inform us. Can you understand the [ower of compounding through this home work?

    Thanks

    Ashal

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