❓ Frequently Asked Questions
What is SIP (Systematic Investment Plan)?
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SIP is a method of investing in mutual funds where you invest a fixed amount regularly (monthly, quarterly). Instead of investing a lumpsum, you spread your investment over time. SIP takes advantage of rupee cost averaging and compounding to build wealth steadily.
What is the difference between SIP and Lumpsum investment?
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In SIP, you invest a fixed small amount every month (e.g., ₹5000/month). In Lumpsum, you invest a large amount at once (e.g., ₹1,00,000 at one time). SIP is suitable for salaried individuals while Lumpsum is ideal when you have a large sum available like a bonus or inheritance.
Is the return rate guaranteed in SIP?
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No, SIP returns are not guaranteed as mutual funds are subject to market risks. The return rate you enter in the calculator is an estimated/expected rate based on historical performance. Actual returns may vary. Always consult a financial advisor before investing.
What is a good SIP return rate to expect?
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Historically, equity mutual funds in India have given 10–15% annual returns over the long term. Debt funds give 6–8%. Index funds typically give 10–12%. For conservative calculations, use 10–12%. For aggressive equity funds, you can use 12–15% as an estimate.
How long should I stay invested in SIP?
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The longer the better! Due to the power of compounding, even small monthly investments can grow into large wealth over 15–20 years. Financial experts recommend staying invested for at least 5 years to ride out market volatility and maximize returns.
Can I stop or pause my SIP?
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Yes! Most mutual fund SIPs can be paused or stopped anytime without any penalty. However, stopping early means missing out on the power of compounding. It's recommended to continue SIPs even during market downturns as you buy more units at lower prices.