How it works & FAQs
The math behind the numbers, plus answers to the questions we hear most often.
Is lump sum better than SIP?
Lump-sum wins in a steadily rising market — 100% of capital earns returns from day one. SIP wins in volatile markets by averaging your cost (rupee-cost averaging). For a windfall or bonus that's already in hand, lump-sum is usually optimal. For regular monthly savings, SIP is the right vehicle.
How is LTCG tax calculated?
Gains above ₹1.25L per financial year attract 12.5% LTCG for equity mutual funds held over 12 months. For example: a ₹5L gain − ₹1.25L exemption = ₹3.75L taxable. Tax = ₹3.75L × 12.5% = ₹46,875. Debt funds are taxed at your income-tax slab rate regardless of holding period.
What is CAGR?
CAGR (Compound Annual Growth Rate) is the year-over-year growth rate of an investment. It smooths out volatility to give you a single planning rate. Equity mutual funds report CAGR over 1, 3, 5 and 10-year standardised horizons.
Should I invest a lump sum in one go or stagger via STP?
If you're nervous about market timing, a Systematic Transfer Plan (STP) moves the lump sum from a liquid/overnight fund into equity in monthly tranches, giving you rupee-cost averaging while still earning returns in the liquid fund. Studies show one-shot deployment beats STP over most 5-year windows, but STP reduces regret risk significantly.