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FAQs

What is a SIP?

A systematic investment plan or SIP allows you to invest a specified amount at a specified frequency in a specified mutual fund scheme. For example, you can start a monthly SIP of Rs. 1,000 in Motilal Oswal Nifty Midcap 150 Index Fund.

At the time of SIP registration, you need to give an auto-debit mandate with your bank account details. The amount will be debited from the bank account on a specified date every month. The AMC will credit your account with the equivalent number of scheme units based on the scheme NAV.

At the time of SIP registration, you need to give an auto-debit mandate with your bank account details. The amount will be debited from the bank account on a specified date every month. The AMC will credit your account with the equivalent number of scheme units based on the scheme NAV.
A SIP investment calculator can tell you the amount you will accumulate for your financial goal based on the amount you invest, the investment period, and the expected rate of return. The three input parameters influence your outcome (amount accumulated) in the following manner:
  1. Monthly investment:

    The general rule is that the higher the amount that you invest every month, the higher the amount you will accumulate. However, the amount available for investment will depend on what is left after deducting monthly expenses from monthly income. The disposable income has to be divided among all investments such as PPF, mutual fund SIPs, insurance premiums, gold, fixed income products, etc.
  2. Investment period:

    The general rule is that the longer the investment period, the higher the amount you will accumulate. A longer investment period allows your money to benefit from compounding. Hence, you should start investing early in your career, maybe, the moment you start earning.
    If your investment period is up to three years, you should consider investing in debt mutual funds. If the investment period is up to five years, you may consider investing in hybrid mutual funds. And, if the investment period is more than five years, then you may consider investing in equity mutual funds.
  3. Expected rate of return:

    The general rule is that the higher the expected rate of return, the higher the amount you will accumulate. Higher expected SIP returns come with higher risk. You need to be realistic while assuming your expected rate of return. If you factor in a higher expected rate of return (unrealistic), and if it doesn't materialize, you will not be able to accumulate the expected amount.
    For equity funds, you should consider an expected rate of return in the 10-12% CAGR. For hybrid funds, you should consider an expected rate of return in the 8-10% CAGR. For debt mutual funds, you should consider an expected rate of return in the 4-6% CAGR. It is always better to be conservative in your expected rate of return. If actual returns are higher than expected, then it is a bonus. But, if the actual returns are lower than the expected rate of return, it can jeopardies investment goals.
You can access the Glide Invest SIP calculator here. Assume you are planning to invest Rs. 10,000 a month for your daughter’s higher education. Your investment time horizon is 15 years, and your expected rate of return is 12%.

You need to enter these parameters in the Glide Invest calculator. The calculator will tell you the amount that you will accumulate. The above example will tell you that you are expected to accumulate Rs. 47.59 lakhs. Your total investment will be Rs. 18 lakhs and Rs. 29.59 lakhs will be the additional return on your investment.

To start investing in mutual fund schemes as per your appropriate asset allocation, click here to download the Glide Invest App.
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