Magic of compounding: A monthly SIP of 10K in this mutual fund since inception would have grown to ₹1.76 crore

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mutual funds which minimise the risk? Well, it is certainly an interplay of several factors but what really can be a gamechanger is ‘compounding’.Compounding is so potent a factor with respect to wealth creation that it is referred to as ‘magic’ for the benefits it offers, and rightly so.This is a magic pill which is seen as a pre requisite to allow your investment to grow. Even if you have zeroed in the best stocks, you will need to keep your money invested for a long duration in order for compounding to kick in.To encapsulate the power of time instead of timing, legendary investor Warren Buffett once famously said, “You can't produce a baby in one month by getting nine women pregnant."ALSO READ | Planning to invest in a fixed deposit for 1 year: Top 5 banks offering highest interest ratesIn order to demonstrate the benefits of compounding, we have randomly selected one mid cap mutual fund scheme i.e.,HSBC Midcap Fund, which has delivered good returns since the launch of fund.We suppose that the investor was consistent in investing ₹10,000 every month via the SIP route into this mutual fund scheme.This means in a year’s time, the total investment would have accumulated to ₹1.2 lakh.