It is challenging for many investors to step into the mutual fund scenario. To invest a lump sum amount of money or regular or SIP mode of investment is always a question. While all the options have their own pros and cons, SIP is gaining exceptional popularity in the market.
What is SIP?
Systematic Investment Plan or SIP is a method for mutual fund schemes investment.
In SIP, investors invest a fixed amount of money at a systematic or regular interval in the mutual fund investment scheme. It is similar to having a recurring deposit account. Every month, the fixed amount is deposited to the mutual fund investment scheme like how every month a fixed amount is deposited to your recurring deposit account.
The only difference between recurring deposit (RD) and SIP is that in case of RD, the rate of interest is constant and known beforehand. In case of SIP, however the rate of interest on the amount keeps changing based on various market conditions.
Benefits of Investing Through SIP
- In case of lump sum investment, investors have to watch out the market for any dips. As soon as the market goes down, units are purchased. In case of SIP, this is not a problem since an amount of money keeps flowing in the investment each month, without fail.
- The fund is simple in case of SIP investment. In case the market dips, more units are purchased. If the market is at a high, fewer units are purchased. In the longer run, this helps because you will not end up investing in a volatile market.
- People are bound to become disciplined when they start investing through SIP. Being disciplined indeed are traits of creating more wealth and staying invested.
- You do not have to worry about missing the payment date or how many shares of your savings to invest in case of SIP since the investment amount and payment date is fixed. You can also automate to link your account details with the fund investment so that each month on a specific date, your investment could be funded from your bank account.
What is a SIP calculator?
SIP calculator is an online tool, very useful for the investor. SIP calculator helps to determine an estimate of the return that an investor will make out of the investment in a specific tenure on a specific amount.
It is very helpful for investors who want to know the amount of return in advance, who have a financial goal in mind, or who want to yield maximum benefits out of the investment.
Benefits of SIP Calculator
- Know About Your Returns
With the help of SIP Calculator, investors can know their returns. This, in turn, helps the investors to make their future investment plans.
- Quick Results
It provides results quickly. You do not have to wait to apply the formula multiple times and do complex calculations yourself. You just need to enter the details as asked and the results are generated quickly. You know about your investments and returns in minutes.
- Accurate Results
It gives accurate results. Since the formula to calculate returns is complex, the manual calculation is prone to errors. SIP Calculator is made by experts in the field of investment and financial advice hence this is less likely to make errors while calculating the results.
- Use Multiple Times Without Paying A Penny
SIP Calculators are absolutely free of cost to use. You can use it any number of times without worrying about the charges or subscriptions.
How to Use SIP Calculator?
It is very easy to use a SIP Calculator. Because of the simple and user-friendly interface, it is extremely easy to use the calculator.
The tool asks for some inputs and once you key in the values, it generates the desired output.
- Step 1
Enter the monthly investment of SIP that you can invest in the mutual fund.
Please note that the minimum investment limit is INR 500/-.
- Step 2
Based on the track records of the mutual funds that you are investing in, enter the expected rate of return.
Please note that this field cannot be determined beforehand and can only be assumed.
- Step 3
Enter the tenure. This is the third and last value that needs to be entered in the tool. Tenure is the amount of time for which you will be investing in the mutual fund.
Once you enter all these details in the tool, an estimated result of your SIP mutual fund investment will be calculated and displayed on the screen.
Investment is not easy. To put your hard earned money and wait for it to grow is tough. At times, the investment may turn out to be a nightmare too, if not researched well or if the economy changes overnight. Though the chances are less, nothing is really impossible.
It is always a good idea to consult a financial advisor before investing your hard earned money in anything. It is also recommended that you do your own research before putting your money into any investment. Have control over your money and have control over your life.