What does SIP mean?
SIP is a systematic investment plan that helps you to invest a fixed amount periodically in a chosen mutual fund. For example, if you have started investing some sip amount, let’s say 5000 rupees in the mutual fund than the same amount of money will be deducted from your account and invested in a mutual fund on the pre-decided date.
A sip calculator helps you to check the returns you will get by sip investing. Mutual fund sip calculator will ask you about the type of mutual fund, scheme, investment amount, start and end sip date and shows you the generated return.
What are the benefits of sip investing?
Sip is an automated way to invest, and it has many benefits over other investments.Below, are some important benefits are mentioned.
- Discipline approach to investing – There are many people across the world wait for investing stock market by timing the market value. However, investing in stock requires a lot of market knowledge, good research, and technical analysis. If you are new in investing you should not go into the stock option, instead, an automated sip is a great to for beginners.
- Advantage of averaging cost – In sip, the amount invested is constant that means one can buy more units when the price is low and fewer units when the price is high. Thus, the average cost is less.
- Simple and easy to monitor – It is very simple to monitor your investment, and you do not have to take off the time from your busy schedule to check your investment. In addition, you will get a dashboard from where you can easily check the health of your investment.
- Benefits of starting early – It is very important to start investing early in order to grow your wealth. Furthermore, you do not need a large amount of money to invest, with SIP you can start investing with a low amount and gradually increase the amount.
How does a SIP calculator work?
A sip calculator calculated the returns according to compound interest. You have to choose the type of mutual fund and scheme. Then enter the amount and choose the number of years you want to invest your money.
After entering all the details, the mutual fund calculator will calculate the return on investment. Some also show you a comparison between sip and other investment options like fixed deposits.
How long to invest in SIP?
There is no rule for how long should you invest in sip. However, an average of a minimum of 4 to 5 years is considered as low risk of loss. whereas a short term investment can give you more return but has a high risk of loss.
How to invest in SIP?
There are two methods to invest in sip one is manual and other is automatic. In the manual method, you have to make a monthly investment in your sip account. In the automatic method, you have to link your bank account to your sip account so that the deductions are made automatically.