Learn Investing

How SIP Works

When you start a SIP, a fixed amount is automatically debited from your bank account and invested in your chosen mutual fund. For example, ₹5,000 every month on the 5th.

Benefits of SIP

• Rupee Cost Averaging: You buy more units when prices are low, fewer when high
• Power of Compounding: Your returns earn returns over time
• Discipline: Automatic investing builds savings habits
• Start Small: Begin with just ₹500/month
• No Timing Needed: Removes the stress of market timing

Example: ₹5,000 SIP Growth

Duration	Invested	Value @12%	Gains
5 years	₹3,00,000	₹4,12,000	₹1,12,000
10 years	₹6,00,000	₹11,61,000	₹5,61,000
20 years	₹12,00,000	₹49,95,000	₹37,95,000
30 years	₹18,00,000	₹1,76,49,000	₹1,58,49,000

👉 Calculate your SIP returns

Simple vs Compound Interest

Simple Interest: You earn interest only on the principal amount.

Compound Interest: You earn interest on principal AND on previously earned interest.

The Compound Interest Formula

A = P(1 + r/n)^(nt)

Where: A = Final amount, P = Principal, r = Interest rate, n = Compounding frequency, t = Time in years

₹1 Lakh Growing at 12%

Years	Simple Interest	Compound Interest	Difference
10	₹2,20,000	₹3,10,585	₹90,585
20	₹3,40,000	₹9,64,629	₹6,24,629
30	₹4,60,000	₹29,95,992	₹25,35,992

Rule of 72

Divide 72 by your interest rate to know how many years it takes to double your money.

• At 6%: 72/6 = 12 years to double
• At 12%: 72/12 = 6 years to double
• At 15%: 72/15 = 4.8 years to double

👉 Try our Compound Interest Calculator

Types of Mutual Funds

• Equity Funds: Invest in stocks. Higher risk, higher returns (12-15%)
• Debt Funds: Invest in bonds. Lower risk, stable returns (6-8%)
• Hybrid Funds: Mix of equity and debt. Balanced risk
• Index Funds: Track indices like Nifty 50. Low cost, passive
• ELSS: Tax-saving funds with 3-year lock-in. Section 80C benefit

By Market Cap

• Large Cap: Top 100 companies. Stable, lower risk (10-12%)
• Mid Cap: 101-250 companies. Medium risk (12-15%)
• Small Cap: 251+ companies. High risk, high reward (15-20%)

How to Choose a Mutual Fund

1. Define your goal (retirement, house, education)
2. Know your risk appetite
3. Check 5-year and 10-year returns
4. Compare expense ratio (lower is better)
5. Look at fund manager track record

When SIP Wins

• You have regular income (salary)
• Markets are volatile or falling
• You're a beginner investor
• You want to reduce timing risk

When Lump Sum Wins

• You have a large amount to invest (bonus, inheritance)
• Markets are at a low point
• You're investing for very long term (20+ years)
• Historical data: Lump sum beats SIP 2 out of 3 times

Best Strategy

Use SIP for regular savings AND invest lump sums during market crashes. This gives you the best of both worlds.

👉 Compare SIP vs Lump Sum with real scenarios

The 25x Rule

Multiply your annual expenses by 25. That's your minimum retirement corpus.

Example: ₹50,000/month expenses = ₹6 Lakh/year × 25 = ₹1.5 Crore needed

Account for Inflation

At 6% inflation, ₹50,000 today = ₹1.6 Lakh in 20 years. Your corpus needs to handle this.

The 4% Withdrawal Rule

Withdraw only 4% of your corpus annually. This ensures your money lasts 30+ years.

₹1.5 Crore × 4% = ₹6 Lakh/year = ₹50,000/month

Start Early: The Numbers

Start Age	Monthly SIP	Corpus at 60
25	₹5,000	₹3.5 Crore
30	₹5,000	₹1.76 Crore
35	₹5,000	₹86 Lakh
40	₹5,000	₹41 Lakh

Starting 10 years late requires 2x the investment for the same corpus!

👉 Calculate your future wealth

What is Step-Up SIP?

Increase your SIP amount by 10% every year. As your income grows, so does your investment.

Flat SIP vs Step-Up SIP (₹10,000 start, 20 years, 12%)

Type	Total Invested	Final Value
Flat SIP	₹24 Lakh	₹1 Crore
10% Step-Up	₹75 Lakh	₹2.5 Crore

How to Implement

1. Start with a comfortable amount
2. Set calendar reminder for annual increase
3. Increase by 10% or your salary hike %
4. Most AMCs offer automatic step-up option

How SWP Works

Invest a lump sum → Withdraw fixed amount monthly → Remaining money keeps earning returns

SWP vs FD for Retirement

Factor	SWP	FD
Returns	8-12%	6-7%
Tax	LTCG (10%)	As per slab
Flexibility	High	Low
Inflation protection	Yes	No

Example: ₹1 Crore Corpus

Withdraw ₹50,000/month at 10% return. Your corpus lasts 25+ years and you withdraw ₹1.5 Crore total!

👉 Plan your SWP withdrawals