No, SIP investments are not entirely tax-free. However, they offer tax benefits compared to other investments. Long-term capital gains (LTCG) from equity-based SIPs exceeding one year are taxed at 10% with no indexation benefit. Debt-based SIPs have different tax treatments, with short-term gains (less than 3 years) taxed at your income slab and LTCG taxed at 20% with indexation. Consult a financial advisor for detailed tax implications on specific SIP investments.

• Investment objective: Align the fund's objective with your financial goals (e.g., retirement, child education).

• Risk tolerance: Choose a fund that matches your risk appetite (conservative, moderate, aggressive).

• Performance history: Track the fund's historical returns and risk measures like standard deviation.

• Expense ratio: Opt for funds with lower expense ratios (management fees) for better returns.

• Fund house reputation: Consider the fund house's track record, expertise, and size.

• Potential for higher returns: SIPs invest in market-linked instruments, offering higher potential returns than fixed deposits (FDs).

• Power of compounding: Regular investments and reinvested returns lead to significant wealth accumulation over time through compounding.

• Flexibility: You can adjust your SIP amount or pause it, unlike FDs with locked-in tenures.

• Rupee-cost averaging: Investing fixed amounts at regular intervals buys more units when markets are low and fewer when high, averaging out the cost over time.

• SIP amount: ₹5,000 per month

• Frequency: Monthly

• Expected rate of return: 12% per annum

• Tenure: 10 years (120 months)

• Periodic interest rate: 12% / 12 = 1% per month

• Total SIP installments: 120 months

• Applying the formula: M = 5000 × ({[1 + 0.01]^120 – 1} / 0.01) × (1 + 0.01) M ≈ ₹11,65,546.52

• Maturity value (projected amount): ₹11,65,546.52

• Total investment (amount contributed): ₹6,00,000

• Interest earned: ₹5,65,546.52

• By investing ₹5,000 monthly for 10 years, you could potentially accumulate a corpus of over ₹11.65 lakhs, assuming a 12% annual return.

• The power of compounding plays a significant role, as you earn interest on both your principal and the accumulated returns over time.