The Compound Formula and the Power of Time
Future value: FV = PV × (1 + r/n)^(n×t) + PMT × [(1 + r/n)^(n×t) − 1] / (r/n)
CNY 100K principal, 10% p.a., 30 years:
- Simple: 10 + 10 × 10% × 30 = CNY 400K
- Compound: 10 × 1.1^30 = CNY 1.745M
- A 4x+ gap
Regular Investing: The Steadiest Path for Ordinary People
SIP = a fixed monthly amount into the same fund, no market timing.
Key advantages:
- Forced saving builds discipline
- Averages your cost — dips buy more shares
- No forecasting needed; long-run odds of profit are high
History: 10-year SIPs into the CSI 300 from any start date won ~85% of the time, at a median 8%–10% p.a.
4 Real Wealth-Planning Scenarios
1. Fresh graduate at 25: CNY 2,000/month to age 60 (35 years) at 8% → CNY 4.5M.
2. At 30: CNY 3,000/month, 25 years, 8% → CNY 2.84M.
3. At 35: CNY 5,000/month, 20 years, 8% → CNY 2.94M.
4. At 40: CNY 8,000/month, 15 years, 8% → CNY 2.71M.
Start earlier, invest less monthly, end up with more — time beats amount.
3 SIP Traps
Trap 1: waiting for a dip to start. The core of SIP is discipline — dips are exactly when you cheapen your average.
Trap 2: fund-hopping. Pick 3–5 funds of different styles and hold; don't churn on short-term noise.
Trap 3: treating SIPs as deposits. A SIP is an investment — use money you won't need for 3–5 years.