What Are the Benefits of Using a Sip Calculator?


Why SIPs are popular?

SIP or Systematic Investment Plan is a financial tool to invest in mutual funds. This is one of the popular tools trusted by investors for good returns in the long-term. As the name suggests, SIP allows investors to invest money in a systematic manner at a certain frequency. So, it doesn’tneeda one-timeinvestment of a lumpsum amount. The investor can invest a smaller amount over a period with calculated returns at the end of the tenure.

What is a SIP Calculator?

A sip calculator is a tool based on a certain algorithm that gives the investor to check the estimated returns. It takes into consideration a few things, the periodic investment amount, the frequency, the duration, and the expected rate of return. Based on these inputs the tool calculates the estimated returns after the duration. It gives the investor a clear understanding helping him to choose the duration and amount to invest based on his financial goals.

Benefits of SIPs

SIPs are gaining popularity among investors for multiple reasons. Some of the benefits are listed below:

  1. It needs a periodic and regular investment instead of investing a huge amount of money at one go unlike FDs
  2. The investor doesn’t need to be bothered about market fluctuations and timing
  3. SIPs are great long-term investment tools with lesser risks and high returns
  4. You can start with as low as Rs 500 upto any amount that you wish based on your financial plan
  5. If you choose from a tax-saving sip mutual fund scheme you can get tax deductions under 80C
  6. Unlike FDs and RDs, you can stop investing in SIPs. You can either redeem the money invested(after the lock-in period is over) or you can remain invested.

There are many other advantages of investing in a SIP. You will find many options available in the market. Use the SIP calculator to estimate the returns and choose the best one that aligns with your financial objective.

Additional facts you should know

Tenure: There is no upper limit for the tenure, however, most SIPs come with a maximum tenure of 30 years. The lock-in period is three years for close-ended MFs, hence you can redeem the investment you made after three years.

Other calculators: There are similar calculators available like the FD calculator, NPV calculator, RD calculator, etc. All the calculators run on specific algorithms that take frequency, amount, and tenure as primary inputs. All these tools are used by investors to estimate the returns based on the inputs provided.

Eligibility: There are no specific criteria to invest in SIPs. All you need is a bank account, valid ID and address proofs, and a stable income as SIPs need periodic investments at regular intervals.

How to start investing in SIP?

Investing in SIP online is very easy. You can apply through authorised portals, by using the SIP calculator and selecting the schemes based on your individual needs. You will also need to submit the KYC documents and wait until the verification is done. Once the documents are validated and approved, you can startyour SIP journey right away.