1. What is Mutual Fund SIP?

A Systematic Investment Plan (SIP) is an investment strategy where individuals invest a fixed amount regularly in mutual funds. This approach helps in rupee cost averaging and long-term wealth creation through disciplined investing.

2. How Does the Calculator Work?

The calculator uses the SIP future value formula:

Where:

• \( FV \) — Future Value of investment (USD)
• \( PMT \) — Monthly investment amount (USD)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Total number of months

Explanation: This formula calculates the future value of regular monthly investments considering compound interest over time.

3. Importance of SIP Investment

Details: SIP investing helps in disciplined wealth creation, takes advantage of compounding, and reduces the impact of market volatility through rupee cost averaging.

4. Using the Calculator

Tips: Enter monthly investment amount in USD, monthly interest rate as decimal (e.g., 0.01 for 1%), and investment period in months. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What is the advantage of SIP over lump sum investment?
A: SIP helps in averaging purchase costs and eliminates the need for market timing, making it suitable for retail investors.

Q2: How is monthly interest rate calculated from annual rate?
A: Monthly rate = Annual rate / 12. For example, 12% annual = 1% monthly = 0.01 decimal.

Q3: Can I change my SIP amount during the investment period?
A: Most mutual funds allow increasing SIP amounts, but decreases may have restrictions. Check with your fund house.

Q4: Are there tax benefits for SIP investments?
A: ELSS (Equity Linked Savings Scheme) mutual funds offer tax benefits under Section 80C with a 3-year lock-in period.

Q5: What happens if I miss a SIP payment?
A: Typically, the installment is skipped, but multiple missed payments may lead to SIP cancellation. Some funds may charge penalties.