Mutual Funds pool money from multiple investors and invest it across diverse assets like stocks, bonds, and other securities to achieve a common financial goal. These funds are professionally managed by experienced Fund Managers, who analyze market  trends, carefully select investments, and actively manage risks to optimize returns.

Systematic Investment Plan (SIP) is probably a retail investor’s best friend, as it allows you to invest small amounts regularly—daily, weekly, or monthly—in Mutual Funds, ensuring discipline, convenience, and long-term growth.
 

Mutual Funds are investment vehicles that pool money from multiple investors to invest in various securities such as stocks, bonds, or a combination thereof, managed by professional Fund Managers. A Systematic Investment Plan (‘SIP’) is just one of the many methods of investing in a Mutual Fund scheme. In SIP a fixed amount (or as may be specified) is invested regularly into Mutual Funds, providing investors with disciplined and hassle free investing.

With SIP, because the amount invested in each instalment is fixed, you get more units when the NAV (Net Asset Value) of the Scheme, is low and you get less units when the NAV are high. This generally reduces the impact of market volatility in the long-term and is known as rupee cost averaging.

NAV stands for Net Asset Value. When you invest in any Mutual Fund Scheme, you are allotted units of that Scheme. NAV is net asset value of one unit in that Scheme. The NAV per unit is calculated by dividing the net assets of the scheme (Market/Fair Value of Investments + Current Assets - Current Liabilities and Provisions) by the number of units outstanding under that scheme.

Total number of units in the Mutual Fund scheme multiplied by the NAV is the AUM/Market Value of that Fund.

SIP top-up allows you to automatically increase your SIP amount (by Amount or specified %) at pre determined frequency. It aims to help your money to not only keep up with inflation but also grow in line with your increasing investing capacity over time without worrying about anything.

SWP is a feature offered by Mutual Funds that allows investors to regularly receive a predetermined amount of money at specified intervals as per the choice of the investors or the norms of the particular scheme, from their holdings in that Scheme. Unlike SIP (‘Systematic Investment Plan’), which involves regular investments, SWP involves periodic withdrawals  and can take care of investor’s needs of regular cashflow. 

It's an investment mode where you can regularly transfer a fixed amount of money from one Mutual Fund scheme to another Mutual Fund scheme within the same fund house. This strategy helps investors gradually move funds from a relatively safer asset class to a potentially higher return and risk asset class over time and vice versa, reducing the risk associated with timing the market.

There are many common mistakes that one must avoid to enjoy the full potential of SIPs. These include not having a goal or having an unrealistic goal, choosing the wrong scheme based on your risk profile and investment objective, not investing with discipline and stopping SIP when markets are volatile, not topping up your SIP, not reviewing your investments periodically and so on... 

Compounding refers to benefit from earnings being reinvested to generate returns on original invested amount including returns generated  over time, leading to potential exponential growth. Starting early, long-term investing and regular contributions are essential to fully benefit from the compounding effect.