Question 1

What is SIP and how does it work?

Accepted Answer

SIP (Systematic Investment Plan) is a method of investing a fixed amount regularly in mutual funds. You invest the same amount every month, which helps you avoid timing the market and benefit from rupee cost averaging.

Question 2

What is the minimum SIP amount?

Accepted Answer

Most mutual funds allow SIP with a minimum amount of ₹500 to ₹1,000 per month, though some funds may have higher minimums. Check with your fund provider for specific amounts.

Question 3

How is SIP return calculated?

Accepted Answer

SIP returns are calculated using the Future Value formula, considering your monthly investment, expected annual return rate, and investment period. The calculator compounds returns monthly.

Question 4

Is SIP better than lump sum investment?

Accepted Answer

SIP is beneficial for beginners as it reduces market timing risk and enforces regular investing discipline. Lump sum can be better if you have capital and expect immediate gains, but SIP is generally safer for long-term wealth creation.

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