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SIP Basics:
How is SIP return calculated?
SIP returns are calculated using XIRR (Extended Internal Rate of Return), which considers multiple investment dates and cash flows over time to estimate annualized returns accurately.
What is a good return rate for SIP?
Historically, equity mutual funds in India have delivered around 12% to 15% annualized returns over the long term. Actual returns depend on market conditions, risk level, and investment duration.
Strategy:
Should I choose step-up SIP?
A step-up SIP increases your investment amount every year. This helps align your investments with salary growth and can significantly increase long-term wealth creation.
What happens if I miss a SIP installment?
Missing one SIP installment usually does not cancel your SIP. However, repeated missed payments may lead to SIP mandate cancellation by the asset management company.
Rules & Taxation:
Can I withdraw money from my SIP anytime?
Most open-ended mutual funds allow withdrawals anytime. However, ELSS mutual funds have a mandatory 3-year lock-in period from each investment date.
How are SIP returns taxed in India?
Equity mutual funds held for less than one year are taxed as short-term capital gains at 15%. Long-term capital gains above ₹1 lakh in a financial year are taxed at 10%.