What is SIP (Systematic Investment Plan)?

The acronym SIP stands for Systematic Investment Plan. SIP is a method of investing in mutual funds that is quite systematic. SIPs let you invest on a weekly, quarterly, or monthly basis. The goal of investing in mutual funds through a systematic investment plan (SIP) is to build long-term wealth. Investors can set the amount, the SIP date, and the interval beforehand. It’s undoubtedly the most effective and rigorous method for achieving your objectives and building wealth.

SIP investment is comparable to recurrent deposits (RD) in that we deposit a fixed amount on a regular basis over a long period of time in both of them. SIPs, on the other hand, give a varying return because they invest in mutual funds that are tied to the stock market, whilst RDs offer a set return determined by your bank. When compared to recurrent deposits, SIPs have the potential for higher returns.

Types of Systematic Investment Plan

1. Top-Up SIP: A step-up or top-up SIP lets users increase their investment amount at set intervals by a specific amount or percentage.

2. Flexible SIP: You can alter the amount you invest with a flexible SIP according to your requirements. You can invest according to your cash flow, paying more when you get a bonus or profit, and even skipping an installment if you’re short on cash. 

3. Perpetual SIP: You can invest in a perpetual SIP for as long as you want to, with no end date. You can redeem the money if you’ve built up enough of a corpus to meet your financial goals. 

4. Trigger SIP: People with a good understanding of the financial market should use trigger sip. You can start investing during a specified index level, NAV, date, or event using a trigger SIP. If you want to time your sip investment, you can use a mutual fund sip calculator. 

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What Exactly is a SIP Calculator?

A SIP calculator is a  tool that lets people to estimate the returns on their mutual fund SIP investments. For millennials, SIPs in mutual funds are a popular investment choice. When an investor wants to build a strong financial foundation to meet his future obligations, a SIP calculator can be quite useful. A SIP calculator facilitates an investor in achieving long-term goals by offering an estimate that allows him to better plan his investment. The exit load and expense ratio are not explained in detail by the SIP calculator (if any). Without the need of a pen and paper, the calculator may be quite useful in instantly calculating difficult financial computations. You will just need to enter a few inputs, and the calculator will calculate the outcome in a couple of seconds. 

Advantages of SIP Calculator

Here are some of the advantages of using a SIP calculator.

• SIP calculator assists in the strategic and efficient planning of an investor’s investment.

• This SIP calculator eliminates difficult calculations and calculates the exact return on investment that an investor might expect. As a result, the investor will be assisted in making the best investment selection possible. 

• A person who is new to investing can use a SIP calculator to calculate the fund’s return rate without having to rely on an agent because the calculator does everything for him.

• The SIP calculator assists investors in calculating their expected return at the end of their investment period. If the investor understands how much they want to make at the end of their investment duration, it can also help estimate the monthly investment amount.

• This computer-assisted calculator saves you a lot of time and effort when it comes to performing computations and recalculations to get at expected returns.

How Does the SIP Calculator Work?

SIP calculators use the compound interest formula to estimate potential returns. A SIP plan calculator is based on the values given by the users. Moreover, the SIP calculator asks for the monthly amount to be invested, the investment period (in years), and the estimated rate of return on the SIP.

The formula for a SIP plan calculator is as follows: 

FV = P × ({[1 + i]n – 1} / i) × (1 + i)

In the formula given above –

FV is the amount that gets at maturity or future value

P is the amount that invests at a regular interval

N is the number of duration

i is the compounded rate of return

Bottom Line

A Systematic Investment Plan is a method of investing a fixed amount of money in mutual funds at a regular interval. It is possible to make investments on a Weekly, quarterly, or monthly basis with SIPs. It takes a lot of time and patience to make a good investing selection. This SIP Calculator will allow the investor–to determine the maturity value of all payments they want to make now and in the future. Sip calculators empower you in accomplishing your investment objectives. So, Make the most of them to reap the benefits of investment management.

FAQs

Are SIPs Similar to Mutual Funds?

SIPs are frequently misunderstood as either mutual funds or something else entirely. SIP is really not a fund or scheme or a stock/investment route; it is just a method of investing. It’s a way of investing in a fund or scheme of your preference on a regular interval.

Is it Possible to Decrease My SIP Amount?

You won’t be able to decrease the amount of an existing SIP. But there is a way from which it can be possible, all you have to do is stop all or a few of the existing SIPs and re-start a new one with a lesser amount.

What is the Minimum Amount to Invest in a SIP?

Depending on the asset management company, the minimum amount may vary but a monthly investment of Rs. 500 is the minimal amount that you can make.

What If I Don’t Meet My SIP Deadlines or Don’t Have Enough Money in My Bank Account?

You can, however, miss one SIP if the money is not present in the bank account due to unforeseen circumstances. There are no fines or fees to pay. Even if you miss one SIP date, your SIP account will stay operational; however, if you miss numerous SIP dates, it will be cancelled.