What Is SIP Calculator And It's Benefits In 2023

Dec 26th 2023
Mutual Fund
SIP Calculator And It's Benefits In 2023

What Is SIP Calculator And It's Benefits ? Stock market investments are always lucrative and this is why millions of people prefer to invest in stocks despite knowing that such investments carry high level of risk. According to stock market experts, though stock market investments look easy and feasible, it is not. In most cases, investors end up losing their money by choosing wrong stocks to invest in. The secret to success lies in proper stock market knowledge and experience. This is where mutual funds emerge as the best choice for investors as they allow them to leverage the momentum of markets without getting deeper into the stock market functioning.

The best thing about mutual fund investment is that anyone can start investing in this investment tool. Whether you have just started earning, doing your own business, a housewife, a student, a working professional, a senior citizen, or anyone else, it is very easy to invest in mutual funds. And, a major reason behind this popularity of mutual funds is a Systematic Investment Plan (SIP). In this post, you will get to know more about SIP and how it benefits investors in a number of ways. So, let’s know more below.

What Is A SIP?

A systematic investment plan (SIP) is one of the popular ways for investors to put their money in mutual funds. In such a system, the money is invested in the form of periodic, automatic payments on a regular basis. You may plan your investments with SIPs to meet your long-term or short-term financial objectives. You may achieve this by choosing a mutual fund plan and deciding on the goal amount and the amount you'd like to invest at regular intervals.

You can start a SIP with an amount as low as Rs. 500 to invest in mutual funds. This is one aspect of mutual funds investment that makes it so popular among middle-class people who can save smaller amounts and invest in a SIP. If started at the right time and invested for longer time horizon, SIP tends to give amazing returns to investors over other investment tools like fixed deposits, LIC, PPF, recurring deposits, and others.

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What Is SIP Calculator and Its Benefits

There are numerous benefits of investing in a SIP that every mutual fund investor must know.

1. Professional Money Management

A team of skilled and experienced fund managers manages the money that is invested in mutual funds. Beyond this, the team is fully supported by a group of research analysts that keep an eye on every single move of the stock market and evaluates investment prospects. The investors can seek to make gains from the fund manager's experience whether they invest the amount in either a SIP or a lump sum amount. This is crucial for someone who is now aware of the functioning of stock markets or financial complexity. It is always better to let a professional handle your invested money rather than doing it on your own.

2. Leverage The Power of Compounding

Compounding is meant to decide the returns an investor gets on his SIP investment, like what they get on other mutual funds. Consider the returns in absolute terms to get a detailed knowledge of the potential power of compounding.

3. Invest in smaller amounts

With SIP investment in mutual funds, you can start with an amount as low as Rs. 500. You can still choose to benefit from or be a partner in the expansion of the Indian stock market even if your earnings or savings are modest by opting to invest in SIP plans in a variety of mutual fund schemes offered by organizations.

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4. Financial Discipline

Many people may decide to level up their lifestyle in response to a growth in their earnings. On the other hand, there are many who act wiser and spend invest the extra money they get. SIPs tends to help people in instilling this discipline since they commit to invest a certain sum each month. Additionally, there is no additional work required for monthly pay-outs. Each month, the funds are automatically deducted from their registered account. Compounding causes the tiny sums to accumulate into a sizable sum over time.

5. Rupee-cost Averaging

Since there is no need to time the market in this case, SIPs are really the best investment method in today’s turbulent times. Due to their lack of experience, investors who find themselves unable to time the market by getting indulged in betting based on transitory market fluctuations risk losing money in the process. SIPs eliminate the guess work as the investors invest a particular amount at regular intervals regardless of the market momentum. Investors tend to get more units for their monthly investment when the markets are downwards and their fund’s NAV is low. On the other side, they receive less units when the markets are upwards. This lowers their average cost per allocated unit over the long run.

What Is A SIP Calculator?

A SIP calculator is a web-based tool that is used by investors to determine the final amount they can expect to get when they invest a particular amount in mutual funds for a specific time period. How To Use SIP Calculator?  When using a SIP calculator, you just need to enter the monthly amount you are ready to invest, the expected interest rate, and the time period, and the system would give the maturity amount in no time.

SIP calculators are typically offered by all major fund houses and you can find them right on their website. You just need to log in and look for the SIP calculator on the fund house's website where you want to make your investment. SIP Calculator is available without any cost. By altering the calculator's inputs, you may explore several choices for the monthly investment amount. When utilising a SIP calculator, it is important to remember that the result is calculated after taking into account potential inflation and capital gains tax rates. In order to determine the maturity amount of an investor's one-time investment, you may also utilise a lump sum calculator.

Below Are Some Of The Major Benefits Of Using A SIP Calculator:

  1. Instant calculation – You just need to feed in a few details and the SIP calculator would give you the results instantly. This is undoubtedly the best way to determine the maturity amount out of SIP-based investment.
  2. Zero cost – Another benefit of using a SIP calculator is that it comes free of charge. You can find this tool online which can be used without any cost.
  3. Use low amounts- Even if you cannot invest bigger amounts, a SIP calculator can show how you can utilize smaller amounts and make it grow with systematic, regular investments.
  4. Understanding compounding – By using a SIP calculator, you can easily witness the power of compounding that can help you utilize small amounts and turn them into a handsome maturity amount.

FAQs

1. How Can I Start Investing In A SIP?

It is very easy these days. Either you can visit a fund house’s website or a third-party website and choose the amount you want to invest in a SIP. Submit the KYC documents, and it’s done.

2. Is It Necessary To Undergo KYC Formalities?

Yes, according to SEBI, all mutual fund investors are obliged to complete their KYC fomaliti4es.

3. What Does A 15 Rule Mean In SIP?

According to this rule, investors in mutual funds make monthly SIP investments of 15,000 rupees at a 15% interest rate for 15 years. They can expect to get a maturity amount of about Rs. 1 crore end of the 15 tears.

4. For How Long Should I Invest In A SIP?

According to mutual fund experts, investors should invest at least 5 years in a SIP to get better returns out of their investments.

The Conclusion

If you are looking to invest in SIP for any given purpose, it is recommended to use a SIP calculator once before proceeding with your investment. This would give you a better idea on what amount you can expect upon maturity. Moreover, it would encourage you to invest in SIP and invest consistently.

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