How it works & FAQs
The math behind the numbers, plus answers to the questions we hear most often.
What is SIP and how does the calculation work?
A Systematic Investment Plan invests a fixed amount every month in a mutual fund. The corpus compounds monthly. The formula is FV = P × ((1+r)ⁿ − 1) / r × (1+r) where P is monthly SIP, r is the monthly return (CAGR ÷ 12 ÷ 100) and n is months.
Is 12% a realistic return expectation?
Indian equity mutual funds have historically delivered 11–14% CAGR over 15+ year windows. 12% is a reasonable middle-of-the-road assumption; use 10% for a conservative plan and 14% for an optimistic one. Hybrid or debt funds target 7–9%.
Why does top-up SIP matter so much?
A 10% annual top-up on a ₹10k SIP at 12% for 20 years produces nearly 60% more corpus than a flat SIP — because you're feeding compounding more fuel every year. Most investors get salary hikes yearly; top-up SIPs turn those hikes into wealth automatically.
Inflation-adjusted vs nominal value — which matters?
Nominal is the rupee number you'll see on your statement at maturity. Inflation-adjusted (real) is what that money will actually buy — groceries, rent, travel. For planning long-term goals (retirement, kid's college), always reason in real terms.
Are SIP returns taxable?
Yes. Equity fund gains held over 12 months are taxed at 12.5% LTCG beyond ₹1.25L/yr; short-term at 20%. Debt funds are taxed at your income-tax slab rate regardless of holding.