Why SIP is India's favourite investing habit
A Systematic Investment Plan puts a fixed amount into a mutual fund every month. It gives you rupee-cost averaging (more units when the market is low, fewer when high) and compounding — the two forces behind long-term wealth. Example: ₹10,000/month for 10 years at 12% ≈ ₹23.2 lakh (₹12 lakh invested, ₹11.2 lakh gains). Stretch it to 20 years and the same habit becomes ≈ ₹1 crore — that's compounding working late in the tenure.
- Start early: 10 years of SIP beats 20 years of waiting-then-lump-sum almost every time.
- Increase yearly: a 10% yearly SIP hike (step-up) dramatically boosts the corpus.
- Stay invested through falls: SIP works BECAUSE markets go up and down.
Frequently Asked Questions
A>FV = P × [(1+i)ⁿ − 1]/i × (1+i), where P = monthly amount, i = monthly return (annual ÷ 1200), n = months. This calculator assumes investments at month start.
A>Equity mutual funds have historically returned 10–14% p.a. over 7+ year horizons; debt funds 6–8%. Nothing is guaranteed — plan with 10%.
A>For long goals (5+ years), SIP's growth potential usually beats FD/RD despite market risk. For short goals, FD/RD are safer. Many investors do both.
A>Yes — SIPs can be paused, stopped or topped up anytime with no penalty (except exit load if you redeem units early).
A>Equity funds: LTCG above ₹1.25 lakh/year taxed at 12.5%, STCG (under 1 year) at 20%. Debt funds taxed at your slab. Rules changed in 2024 — check current rules.
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