Question 1

What is the full form of SIP?

Accepted Answer

SIP stands for Systematic Investment Plan. It is a method of investing a fixed sum regularly in a mutual fund scheme.

Question 2

Is SIP better than Fixed Deposit (FD)?

Accepted Answer

SIPs in equity mutual funds usually offer higher returns (12-15%) compared to FDs (6-7%) over the long term (5+ years). However, FDs are safer, whereas SIP returns are market-linked.

Question 3

Can I lose money in SIP?

Accepted Answer

Yes, since SIPs invest in the stock market, the value can fluctuate in the short term. However, over long periods (7-10 years), the risk reduces significantly due to Rupee Cost Averaging.

Question 4

What is the minimum amount to start a SIP?

Accepted Answer

You can start a SIP with as little as ₹500 per month in most Indian mutual funds.

Question 5

How is SIP return calculated?

Accepted Answer

SIP returns are calculated using the XIRR (Extended Internal Rate of Return) method, which accounts for multiple cash inflows at different times.

Systematic Investment Plan (SIP) Calculator