SIP (Systematic Investment Plan) is a method of investing in mutual funds where an investor invests a fixed amount of money at regular intervals (typically monthly or quarterly). The ClearTax SIP Return Calculator will show you the value of your SIP instalments at the end of the investment tenure. You may use the ClearTax SIP Calculator to get a birds-eye view of your mutual fund investments. It helps you to decide on your SIP instalments to achieve your financial goals in time. With SIP since the money gets auto-deducted from your account and goes to your mutual funds, you can sit back and relax. Further, unlike lump sum investments, it ensures that you are working actively towards making your investments grow because of the periodicity.
However, the actual returns offered by a Mutual Fund scheme varies depending on various factors. Please keep in mind the SIP returns of a mutual fund scheme are not fixed unlike a fixed or a recurring deposit. These are market linked and therefore fluctuate as per market movements which may impact the estimated returns. Setting up your SIP is a simple process once you’ve picked a mutual fund. On ET Money, go to your chosen mutual fund, and click on invest. If you’re a first-time investor, complete your KYC and enter the bank details along with your SIP contributions and frequency, and you’re accounting for in done.
SIP – Systematic Investment Plan
Prospective investors can think that SIPs and mutual funds are the same. However, SIPs are merely a method of investing in mutual funds, the other method being a lump sum. A SIP calculator is a tool that helps you determine the returns you can avail when parking your funds in such investment tools. Systematic Investment Plan or SIP is a process of investing a fixed sum of money in mutual funds at regular intervals. An investment tool that provides a systematic way of investing by keeping aside a predefined amount at periodic time intervals. These small portions of one’s money is then collected by mutual fund houses which form a pool of such accumulated funds.
Returns from SIP Investment
It is suitable for anyone, is completely free of cost and can be used any number of times. One of the major advantages of the SIP is its flexibility, which allows you to start your investment with a very small amount. CAs, experts and businesses can get GST ready with Clear GST software & certification course.
- With every investment in an SIP plan in India, the additional units are added to your account depending on the market rate.
- Our experts suggest the best funds and you can get high returns by investing directly or through SIP.
- SIP in itself is not an investment product like FD, gold, or mutual fund.
- The other way of investing in mutual funds is investing a lump sum.
These mutual fund sip calculators are designed to give potential investors an estimate on their mutual fund investments. However, the actual returns offered by a mutual fund scheme varies depending on various factors. The SIP calculator does not provide clarification for the exit load and expense ratio (if any). Only the tax saving/ELSS form 1120-h (Equity-linked Saving Schemes) have a lock-in period of 3 years. However, the investors need to check the exit load which they may have to incur if they exit the scheme before a stipulated time period. But, generally as per experts, it is recommended to invest in an equity mutual fund scheme for a period of at least 3 to 5 years.
Benefits of Investing in SIP
Systematic Investment Plan (SIP) is just an investment style & a way to invest in a mutual fund scheme in a disciplined manner. SIPs are actually a great way to channelize one’s savings & plan for your various life goals accordingly. Besides this, SIP can also act as a smart medium & a deterrent to avoid wasting your income on discretionary expenses. If you sell your mutual fund units at a profit, you will need to pay tax on your gains (not the principal amount). How much tax you need to pay depends on the scheme in which you have invested and the period for which you held the mutual fund units before selling them. Starting early allows time and compounding to work in your favor, allowing you to reach greater financial security and freedom in the future.
Meaning, you buy lesser units when the markets are booming while you buy more units when the markets are on the bearish trend. Over time, the cost of heres a sample case for support for your non purchase of your fund units averages out and turns out to be on the lower side. If you are to get the most out of your lump-sum investment, then you should necessarily time the markets. Lump-sum investments are advisable only when the markets have hit rock bottom, and they are sure to go up in the coming days.
With a fixed amount getting debited for your mutual fund investment, you can plan your monthly budget accordingly. Either you can make a one time payment of Rs 1 Lakh in the mutual fund, also known as lump sum investment. Or you can choose to invest via Systematic Investment Plan or SIP. You can use the SIP calculator for mutual funds like equity (like small-cap, mid-cap, large-cap,etc.), debt, and hybrid funds, ELSS, and index funds.
Investing in mutual funds via an SIP allows you to stagger your investments over and invest a small sum regularly. SIP is one of the most recommended techniques of investing in mutual funds, especially equity and hybrid funds. Equity and hybrid funds can be volatile and SIPs help smoothen out that volatility over time. With debt funds, SIPs are optional as they tend to be less volatile. A SIP calculator is a simple tool that allows individuals to get an idea of the returns on their mutual fund investments made through SIP. SIP investments in mutual funds have become one of the most popular investment options for millennials lately.