Systematic Investment Plan (SIP). SIP is a mechanism of payment of investment in mutual fund by the investors. Systematic Investment Plan is like recurring deposit, where the investors can finalize the amount and date on which their account should be debited. SIP offers an option of monthly and quarterly payment mode.
In order to finalize the payment mode, the investor just need to choose the desired mode of payment along with an application form and submit it to the mutual fund.
The investors can make payment in both online and offline. SIP investment in mutual fund prevents the downfall of equity investment and provides an opportunity to enjoy high returns in long run. With the help of SIP calculator, the investors can analyze how small investments made in regular intervals can provide much profitable returns over a long period of time.
Features of SIP Calculator
For the knowledge of our customers further in this article we have briefly discussed some of the salient features and benefits of using SIP calculator.
- With the help of SIP calculator the investors can invest fixed sum of money in specific mutual fund and gain returns for investment.
- According to the ongoing Net Asset Value the investors are allocated a certain number of units in accordance.
- SIP calculator provides you a clear figure of how much money you should invest in the market in order to gain profitable returns
Benefits of Using SIP Calculator
As decided by the investors, the investors can transfer a fixed amount in monthly and quarterly basis to the mutual fund account from the bank account. SIP calculator provides most beneficial way to invest for small investors as pone can start investing with a lowest amount of Rs100 per month or quarterly. Thus it helps the investors to create corpus over a long period of time. A monthly SIP investment of Rs500 at an interest rate of 9% can grow up to Rs3.35 lakh in 10 years. For investors it is always advisable to invest small amount monthly rather than investing a large lump-sum amount in one go.
Rupee Cost Averaging
This is one of the simplest and most advantageous feature of SIP. This formula is best for investing in equities. Rupee cost averaging works in such a way in which the equal amount is invested in fund at regular intervals of time, so that the investors can buy more units at lower price. Thus, it reduces the average cost per unit over the period of time. Moreover, rupee cost averaging cost smoothen the markets up and down and reduce the risk of market violation.
Provides a Flexible Mode of Investment
One of the major reasons to invest in SIP is that it provides highly flexible mode of investment. Thus, it is profitable for all kind of investors. SIP provides a leniency to stop investing in plan whenever they want. Moreover, the investors are not charged with any penalty irrespective of whether they want to continue investing in mutual fund or stop the SIP.
As compared to the lump-sum investment SIP is more beneficial as the amount invested in on monthly basis, so there is very less or no impact of market violation. Moreover, SIP funds provide flexibility to the investors as one can create, update or cancel SIP anytime. By comparing the changing SIP rates you can choose the most beneficial scheme according to your own choice.
The correct way to calculate returns from a SIP, is always better than a lump – sum investment.