A SIP calculator is a device that assists you with deciding the profits you can benefit when parking your assets in such investment tool.
Prospective investors can feel that SIPs and mutual funds are something very similar. In any case, SIPs are only a technique for investing into mutual funds, the other strategy being a lump sum. Systematic Investment Plan or SIP is a process of investing a decent amountin mutual funds at regular intervals. SIP generally permit you to contribute week after week, quarterly, or month to month.
SIP : SIP is an abbreviation of a Systematic Investment Plan. It is an investment strategy to invest in a certain amount of money at regular intervals of time in a mutual fund scheme. It is a fixed amount of money is auto-debited from the bank account of the investors and is assigned several units, as per the present Net Asset Value (NAV). SIP investment plans are the smartest and most convenient way of investing in mutual funds.
SIP Calculator : As the name suggests SIP calculator helps to calculate the wealth gain and the expected returns for the monthly SIP investment. User can get a rough estimate on the maturity amount for any monthly SIP Plan, based on the projected annual return rate.
Top-up SIP: In this type of SIPs the first installment is fixed, and the incremental amount and frequency of the increment are pre-decided. This leads to an automatic increase in the investment amount at regular intervals.
Flexi Systematic Investment Plan: Flexi Systematic Investment Plan: Here, whether you have chosen the monthly or daily, to pay different SIP amounts every time. This gives you, as the investor, a benefit of not being bound to pay a certain amount every month or daily but decide according to the cash flow at the time of SIP payment. Thus, in case you have a cash crunch you can skip the installment as per the requirement. However, it is also recommended not to do so unless you understand the market conditions and invest.
Perpetual SIP: Under this type the paying SIPs without an end date. Not for a year, 3 or 5 years, but keep going till one wish. If you opt for this scheme, you have the option to redeem the fund at a time of your convenience.
Trigger SIP: This SIP is for the ones that understand markets well, then this type of SIP gives you the option to use that knowledge. You can set a NAV or index level or event or a particular date to start the payments for this type of SIP. Trigger SIP encourages speculation and is therefore not preferred by many.
SIP is a method to build an investment portfolio with a small investment in the mutual funds at regular intervals. Many people choose this route to enter the financial markets and benefit from the compounding returns the best way. There are several features and benefits of SIP. Here are some, have a look at them:
Rupee Cost Averaging: If you choose to invest in a fixed amount of money every month via SIP, you will see that more stocks are purchased when the price of the investment falls. This simultaneously brings down the average cost of buying a financial asset over time.
Convenience: Investing in SIP is a simple and hassle-free process. You can instruct the bank to activate or facilitate you with the auto-debits from your bank account. As nowadays everyone is online, you can also visit the website of the fund house of your choice and click on the link for the SIP registration link or the tab.
Disciplined heading To achieve anything in this world discipline is meant as an essence. By investing in SIP, you commit to saving regularly, and every investment takes you a step closer to reaching the financial objectives.
Compounding: A small sum of money invested in SIP on a regular interval can grow into a considerably the big amount. Through the power of compounding, the interest earns interest, allowing you to fetch a substantial amount of earnings.
It can be a big dilemma for many to knowing when the right time is to invest in the market. As it is hard to predict that when the market will be at its peak or its low point. While SIP is not free from the market volatility.
SIP returns are calculated based on the compound interest. However, the SIP calculator may vary in functioning as it depends on the site you are using. Here are the generic steps of using a SIP calculator:
Step 1: Enter the amount you want to invest.
Step 2: Choose the number of years you are willing to continue the investment.
After providing this much information the SIP calculator will automatically calculate the amount of return.
SIP Advanced Calculator is an upgraded version of the basic SIP calculator. It would calculate the return of post inflation. This shows a better picture of the maturity value considering inflation. Generally, it requires basic information like the monthly investment amount, investment tenure in years, expected the rate of return and the expected rate of inflation to arrive at the maturity value, pre and post inflation.
The reasons for investing in SIP vary based on person to person. But here are the major reasons why people and you should also invest in SIP:
Finance Future Goals: Futures goals like buying a house, child’s education, retirement plans, etc can be achieved with the help of SIP. You can build a corpus over a period by investing a monthly basis.
diversification: Almost every market expert encourages investors to have a diverse portfolio. In the same way, SIP can help you acquire the advantages of diversification even if you invest a small amount. The risk is divided as you invest in different holdings. In this way, you can make better gains.
Minimize Risk Factor: When you invest in the Equity Mutual funds through the SIPs, the risk factor minimizes and ride through the ups & downs of the equity market. This is because the investment is small and is spread over a period. Due to this, market timing is not something to be worried about.
No Pressure of Market Timings: If one invests in a lump sum of amount, it is important to time it well. You can buy a large number of stocks but if you do not time the market well, then you the chances of losses increase. Such worries can be reduced by investing with SIPs as the amount invested is small.
Disciplined Investing: SIP investments help you to build up a habit of investing regularly. It makes you more disciplined in terms of investing. When you start investing through SIP, a fixed amount gets deducted from the bank account each month.
Ans) A SIP calculator helps in planning for the financial goals. It shows how much you need to invest in the SIPs every month and how much corpus that will generate. Knowing this kind of information in advance helps you to develop a perspective for long-term investments. Once you develop a mindset for a continuing SIP for the long term, it helps you create a huge corpus.
Ans) A SIP calculator calculates the maturity amount of an investment made at regular intervals whether monthly, quarterly or a weekly basis. Whereas a lump sum calculator calculates the maturity amount of an investment made at one-time.
Ans) Today almost every fund house or an investment portal offers you the SIP calculation tool. You can use any calculator tool as they run on the same formula and help you get the likely return rate of your investment.
Ans) Yes, the SIP calculator can be used for calculating returns from all types of mutual funds
Ans) SIP planner is a tool just like a SIP calculator that helps an investor plan his SIP investments just in a matter of few seconds.
Ans) No, in the SIP calculator, the annual return rate does not remain the same for all types of funds. You will be required to check the annual return rate of the fund and then enter the rate manually.