SIP Calculator
Calculate returns on your SIP investments.
What is SIP ?
SIP in the context of investment stands for Systematic Investment Plan. It is a method of investing money in mutual funds that allows investors to invest a fixed amount of money at regular intervals, such as monthly, quarterly, or annually.
Under a SIP, the investor gives authorization to the mutual fund to automatically deduct a fixed amount of money from their bank account at regular intervals and invest it in a mutual fund of their choice. The investor benefits from the rupee cost averaging principle, which means that they buy more units when the price of the mutual fund is low and fewer units when the price is high. This helps in averaging out the cost of investment over time and reduces the risk of investing a lump sum amount at a single point in time.
SIPs are a popular investment option for those who want to start investing in mutual funds but have limited funds to invest or do not have the time to actively manage their investments. It is a disciplined approach to investing that helps investors in achieving their long-term financial goals by investing small amounts of money regularly.
The SIP calculator helps you calculate the wealth gain and expected returns for your monthly SIP investment. You get a rough estimate on the maturity amount for any monthly SIP, based on a projected annual return rate.
Benefits of SIP as compare to Lumpsum investment
There are several benefits of investing through Systematic Investment Plan (SIP) as compared to a lump sum investment. Here are some of the key benefits:- Rupee Cost Averaging: SIP allows investors to take advantage of the rupee cost averaging principle. This means that the investor gets more units of the mutual fund when the prices are low and fewer units when the prices are high. Over time, this can help in reducing the average cost of investment and provide better returns.
- Disciplined Investing: SIP encourages disciplined investing as it helps investors to invest regularly without the need for timing the market. It helps in inculcating a habit of saving and investing regularly and avoid the temptation of trying to time the market.
- Flexibility: SIP offers investors the flexibility to choose the investment amount, frequency of investment, and the mutual fund scheme to invest in. Investors can start with a small amount and increase it gradually over time.
- Mitigates Risk: SIP mitigates the risk of investing a large lump sum amount at a single point in time. By investing small amounts regularly, investors can spread their investment over time and reduce the impact of market volatility.
- Better Returns: SIP helps investors to benefit from the power of compounding. Over time, even small investments can grow into significant amounts, generating better returns than a lump sum investment.
FAQs
What is SIP?
SIP stands for Systematic Investment Plan. It is a type of investment plan in which an investor invests a fixed amount of money at regular intervals, usually monthly or quarterly, into a mutual fund or other investment instrument.
How does SIP work?
In a SIP, the investor chooses a mutual fund scheme and invests a fixed amount of money at regular intervals over a period of time. The investment is made through an electronic clearing service (ECS) mandate or a post-dated cheque.
What are the benefits of investing through SIP?
Investing through SIP offers several benefits, such as: Disciplined investing: SIP helps investors invest a fixed amount of money at regular intervals, which helps inculcate disciplined investing habits. Rupee cost averaging: SIP helps investors buy more units when the market is down and fewer units when the market is up, which averages out the cost of investment over time. Power of compounding: SIP allows investors to benefit from the power of compounding, which can help grow wealth over the long term.
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How long should one invest in a SIP?
The ideal investment horizon for a SIP depends on the investor's financial goals, risk appetite, and investment objectives. Typically, experts recommend investing in SIP for a minimum of five years to reap maximum benefits.
Can an investor change the SIP amount or frequency?
Yes, an investor can change the SIP amount or frequency as per their convenience. However, it is recommended to consult with a financial advisor before making any changes to the SIP.
Can an investor stop a SIP mid-way?
Yes, an investor can stop a SIP mid-way by submitting a request to the fund house. However, it is recommended to continue investing for the entire investment horizon to maximize returns.