Paisa Sherpa - Personal finance and investment guide

I recently saw two siblings - a boy and his elder sister boasting about their piggy banks recently when I'd visited their home for a social occasion. The boy had an electronic piggy bank with a passcode to open it. After about 5 minutes of counting the sister said, victoriously "You have only Rs. 620 in your bank, I have a lot more!". She added "620 mei to ek bhi accha toy nahi milega, kuch bhi accha nahi milega".   My mind immediately went to SIPs, I wished I could explain to them just how rewarding a small amount of Rs. 500 can be. One can easily whip up an excel sheet and find out how much a Rs. 500 SIP started in the early 20s will be worth after 15 or 20 years, but returns rarely follow the excel formulae. What is more important is to be aware of the power that an SIP has.   So what exactly is an SIP? How does an SIP work? What is the minimum investment required in an SIP? Let's find out.  What is an SIP? As the name suggests SIP is a System...

  How to measure the return on investment of a mutual fund?  We have all heard about "compounding effect" and how "staying invested" helps in the long run. What we are all talking about is the return on investment . There are a few metrics that one can use to evaluate the returns on a mutual fund investment. We often use these metrics while comparing, selecting and evaluating investments. These are Absolute return, CAGR and XIRR. Ever wondered, which is the more appropriate metric for you? Let’s find out. Absolute Return The most common is the absolute return which simply shows how much the investment has grown in the period. If an investment of Rs. 10000/- is now worth Rs. 15480/-, the absolute return is Rs. 5480/- and the investment has grown by 54.8%. Wow, that's great. But is it really? Absolute returns  simply considers the return from the initial investment till the present day without factoring in the period of the investment. In the above case, whether...