What is a Mutual Fund?
A mutual fund is an investment vehicle that pools money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities. Professional fund managers manage these funds and make investment decisions on behalf of the investors.
What is the difference between SIP and Lump Sum investment?
SIP (Systematic Investment Plan) involves investing a fixed amount regularly (monthly, quarterly, etc.) in a mutual fund, while Lump Sum investment involves investing the entire amount at once. SIP helps in rupee cost averaging and reduces the impact of market volatility, while Lump Sum may give higher returns if timed correctly.
What are Conservative, Moderate, and Aggressive return scenarios?
Conservative scenario assumes lower returns (6-10%) suitable for debt or balanced funds. Moderate scenario assumes medium returns (10-15%) suitable for hybrid or large-cap equity funds. Aggressive scenario assumes higher returns (15-20%) suitable for small-cap or mid-cap equity funds. These are projections and actual returns may vary.
How is mutual fund return calculated?
For SIP, returns are calculated using the future value of annuity formula. For Lump Sum, returns are calculated using the compound interest formula. The calculator considers the investment amount, duration, and expected return rate to project the maturity value.
What is Step-up SIP?
Step-up SIP allows you to increase your monthly investment amount annually by a fixed percentage. This helps you to invest more as your income grows, leading to higher wealth creation over the long term while keeping your investments aligned with your increasing earning capacity.
How often should I review my mutual fund investments?
You should review your mutual fund investments at least annually or whenever there are significant life changes such as marriage, birth of a child, job change, or major market events. Regular reviews help ensure your investments stay aligned with your financial goals and risk tolerance.