1. Why are equity mutual funds good for SIPs?
SIPs make it possible to invest regularly, no matter what the market is like. This, in turn, helps average out market volatility, taking advantage of long-term compounding.
2. What kind of time horizon works best for SIPs in equity funds?
Usually, the duration is 5-10 years or more. The longer you hold an investment, the more likely they are to reap the rewards of compounding and market growth.
3. Can I start SIP with a small amount?
Certainly, many equity funds offer small monthly SIP amounts, making them available to investors with limited monthly savings.
4. Should I mix large-cap and small-cap funds in SIPs?
An even mix (large-cap for stability + small/mid-cap for growth) is a good way to balance risk and return, providing diversification and smoothing over time.
5. Is past performance a guarantee of future returns?
No, however, historical performance shows the fund’s consistency and capability; still, market conditions and future economic factors are also decisive for returns.