Most people tend to continually delay their financial planning process. This results in savings being postponed to a later date. To break this habit, SIP offers the facility to invest small amounts regularly instead of investing large amounts sporadically.
We will see Mr.Early and Mr.Late who start saving at different times. Mr.Early saves for 10 years every year Rs.1000/- and then stops. Mr.Late starts 10 years later and saves for 20 years Rs.1000/- , 10% annual interest, after 30 years Mr.Early will get Rs.117,941/- and Mr.late will get Rs.63,002/-.
(Annual int. rate of 10% not taking into a/c. annual inflation.)
It shows Mr.Early has accumulated far greater wealth over time compared to Mr.Late. It clearly illustrates the benefit of investing of investing early and regularly.
