Mathematics of Personal Finance: Rule of SIP 125.5

In the case of a monthly SIP, dividing 125.5 by the expected rate of returns gives you the number of years when your invested amount and earned interest will be almost the same. In other words, your invested amount will double, and your absolute returns will be almost 100%. This calculation applies irrespective of the monthly SIP amount.

For example, let’s consider Mr. A, who started a monthly SIP of Rs. 10,000 with an expected rate of return of 7.5%. According to the rule:

Number of years = 125.5/7.5 = 16.73 years (approximately 17 years).

This can help us to understand how long to be invested in any SIP.
What’s your thought on this?
Let me know in the comment.

By Sumit Tembhare

Author at Infofable

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