In the world of investments, compounding refers to the ability of an asset to generate returns, and then again generate returns on the original investment as well as on the return from the previous period.
When this goes on for a long period of time, in later periods the original investment grows exponentially and the total corpus becomes multiple times the initial amount.
How does it work?
You invest some money (principal), which earns interest at a certain rate (%) at the end of the first period (yearly, half-yearly, quarterly or monthly). At the end of the second period, a larger block (principal + interest) earns interest: The principal earns interest and along with it, this time, the interest you earned at the end of the first period also earns interest. The total sum that earns interest in the third period is even bigger and, as the process continues, the block of money gets larger.
You can witness this power of compounding in systematic investment plans (SIPs) of mutual funds.
1.ICICI Prudential Tax Plan
2.Reliance Tax Saver (ELSS) Fund
3.HDFC TaxSaver
4.DSP BlackRock Tax Saver Fund
5.Religare Tax Plan
6.Franklin India TaxShield
7.Canara Robeco Equity Tax Saver
8.IDFC Tax Advantage (ELSS) Fund
9.Axis Tax Saver Fund
10.BNP Paribas Long Term Equity Fund
You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds
Invest in Tax Saver Mutual Funds Online -
For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
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