Question 1

What does SIP stand for?

Accepted Answer

SIP stands for Systematic Investment Plan. It is a facility offered by mutual funds that allows you to invest a fixed amount of money at regular intervals horizontally across time, mitigating market volatility.

Question 2

How does the power of compounding work in SIP?

Accepted Answer

Compounding means you earn returns not just on your original investment, but also on the returns generated from previous years. Over a long tenure (10+ years), compounding creates an exponential snowball effect.

Question 3

Can I stop my SIP at any time?

Accepted Answer

Yes, SIPs are totally flexible. You can pause, cancel, or modify the investment amount at any given time without facing mandatory penalties, unlike traditional insurance-linked endowment plans.

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