Compounding is the simple idea that your money earns returns, and those returns continue to earn more over time. This snowball effect becomes especially powerful when you invest regularly. In a SIP, every monthly contribution is reinvested, allowing your investment to grow steadily and accelerate as the years pass.

When you divide the annual Rs 1.5 lakh Section 80C limit into monthly SIPs, it works out to Rs 12,500 per month. As per SIP calculators, this consistent monthly investing, along with compounding, can multiply your savings manifold in a period of 15 years. The Rs 1.5 lakh invested each year can comfortably grow into Rs 30 lakh or even more.

The final amount would depend upon the rate of return. For example, Rs 12,500 per month for 15 years grows to nearly Rs 59.50 lakh at 12% returns, Rs 50.20 lakh at 10% and Rs 42.47 lakh at 8%. These numbers, which can be easily verified using any SIP calculator, demonstrate that even with moderate equity returns, you cross the Rs 30-lakh mark well before 15 years.