SIP Calculator tool helps you to calculate expected returns on your SIP investment. This SIP Calculator will give you an overview of how much corpus one will generate with particular monthly investment for a given period. SIP or Systematic Investment Plan allows you to invest for particular intervals of monthly or quarterly investment mainly offered by Mutual Funds. Start calculating your SIP returns with this easy to use SIP Calculator.
If you want to build an investment portfolio by putting in small sums of money at regular intervals, then Systematic Investment Plan or SIP is the best option for you. It is a regular investment method by which you can build wealth over a long period.
So, if you are planning to build wealth and can’t afford a lump-sum investment in any investment vehicle, then Systematic Investment Pan (SIP) is the way out for you. It is a smart savings method and lets you build wealth for the future.
What is Systematic Investment Plan or SIP?
A Systematic Investment Plan or SIP is an investment vehicle which allows investors to invest small periodic amounts in mutual funds. It works on the principle of regular investments in which a certain pre-determined amount is invested at regular intervals.
It is like a recurring deposit wherein you put in a small amount every month. So, instead of making a one-time heavy investment, SIP allows you to make small periodic investments in a mutual fund.
With SIP, you can start investing by making periodic investments on a regular basis. For example, you can invest Rs.500 or Rs.1000 in SIP on a regular basis instead of make the one-time heavy investment.
In SIP, an investor is allowed to choose his preferred mode of investment which can be weekly, monthly or quarterly, according to his convenience. Also, users of SIP can choose from various investment vehicles ranging from stocks, mutual funds, ETFs, and even Gold funds. Nowadays, almost all mutual fund companies offer the option of investment through Systematic Investment Plan.
If an investor regularly invests in a SIP, he or she can get handsome returns. Just take this example to gauge on the wealth created by investing in a SIP. A monthly SIP of Rs.1000 for ten years at the return of 9% per annum would grow to Rs. 6.69 Lakh. If the same amount is invested in the SIP for 30 years, the amount will grow to 17.83 Lakh.
Investors can choose between Amount based and Quantity based SIPs. In Amount based SIP, a fixed amount (which is decided by you) is invested in your selected share at a predefined frequency. Whereas in Quantity based SIP, a fixed quantity of shares is purchased at a pre-defined frequency of your desired company.
Some Important Features of SIP
SIP offers a tremendous opportunity for long-term wealth creation by investing small amounts over a long-term time horizon in mutual funds or equity market.
The following are the noteworthy features of SIP:
- Allows you to accumulate wealth by investing a small sum of money at regular intervals for a long-term time horizon.
- It is simple to maintain, and even people with a tight budget can start investing.
- Offers Flexible Intervals of Investment such as weekly, monthly or quarterly.
- Flexibility regarding Amount or Quantity based SIP.
- Based on the concept of Rupee-Cost Averaging.
- No need to time the market.
- Involves the Power of Compounding.
How does SIP work?
In SIP a fixed sum is regularly invested in a mutual fund scheme. It allows you to buy units on a given date each month. In SIP, there is no need to time the market. Investment in SIP can be made through post dated cheque or ECS (auto-debit) facility.
Investors are required to fill up an Application form and SIP mandate form. The forms can be submitted to the Mutual Fund Service Centre or the nearest service centre of the Registrar & Transfer Agent.
Herein, they can indicate their choice for the SIP date on which the amount will be invested. Subsequent SIPs are auto-debited following the standing instructions or post-dated cheques. The amount is invested at the closing Net Asset Value (NAV) on the date when the amount is debited or cheque is cleared.
Benefits of Systematic Investment Plan
SIP has become a very popular medium of investment as investors with small investment budget can also participate in it. It’s always a good idea to invest in SIP to build wealth. Let us explore the benefits of SIP.
- It develops the habit of regular investment.
- Due to regular investment, one can invest a higher amount at the end of the year.
- One can start a SIP with a small amount. You can even start investing in a SIP with the amount as low as Rs.500/month.
- You don’t need to worry about timing the market.
- Your invested money starts getting a return from day one.
- You purchase the mutual fund units at average price during the SIP period.
- You get the benefit of rupee cost averaging. You get more number of mutual fund units if the price of mutual fund unit goes down. You will get less number of mutual fund units if the price of mutual fund unit goes up.
- Such auto-balancing helps you to get good returns.
- You can choose the frequency of SIP according to your convenience. It can be weekly, monthly, quarterly, or fortnightly.
- It’s very flexible. You can start or stop SIP any time.
- It is very convenient to make investments in a SIP. The regular SIP payment can be made through post dated cheques or ECS (Electronic Clearing System).
- There is no entry or exit load if the amount is invested in mutual fund through a SIP.
- Offer taxation benefits as SIPs are taxed for capital gains on the first-in-first-out basis.
- Due to the power of compounding, SIPs have the potential of delivering attractive returns over a long investment period.
- The SIP amount can be increased or decreased.
- Full or partial withdrawal is allowed during or after the SIP tenor.
- It encourages the habit of saving.
With SIP Calculator you can easily calculate returns on your SIP investments. Using the SIP Calculator, you can get projected SIP returns for various time durations for expected annual returns. You need to select monthly investment amount, investment period, and expected annual rate of return. Once you hit the ‘calculate’ button, the SIP Calculator shows you the report on SIP Returns. It shows the total amount invested, expected maturity amount and wealth gain.
So, with SIP you can amass great wealth if you keep on investing for a long term period. Obviously, with SIP, you get the benefit of starting early, power of compounding and rupee-cost averaging.
We would like to clarify that the information provided above is based on our research and findings of SIP. However, we do not offer any financial advice. There are inherent risks with an investment in mutual funds or any other asset class.
The SIP Calculator is a web-based tool that simply provides a rough estimate of the maturity amount on your SIP Investments. The actual returns may be higher or lower than the estimated value. So, before making any decision, you should do your analysis or else hire a financial advisor for consultation and clarifications on SIP.