SIP refers to the Systematic Investment Plan, a simple and easy way of investing money in your favorite mutual fund scheme/s. SIP allows you to invest regularly a fixed sum of money in the mutual fund. Financial investment calls for a systematic way of putting your money in the right schemes and the SIP is one such a way that can make you a successful investor.
The SIP Calculator helps you to find out in advance the projected financial gains and returns on investment from your monthly SIP investment. Based on a projected annual return rate, the SIP Investment Calculator helps you determine a rough evaluation of the amount at different time periods for any monthly SIP amount.
A SIP works on the basic rule of regular investments. In a SIP, your pre-determined amount of money is auto-debited from your bank account and invested into a particular mutual fund scheme chosen by you. A certain number of units based on the ongoing market rate (called NAV or net asset value) for the day are allocated to you.
So, whenever an amount is invested by you throuhg SIP, a certain number of units from the mutual fund scheme depending on the current market rate are allocated to you. In this way, SIP provides with the flexibility to buy more units when the price declines and lesser units when the price surges. As a result of this smart calculated way of investment, units of the mutual fund scheme are bought at varying market rates. This helps investors to avail Rupee Cost Averaging and the Power of Compounding that ensures that you get maximum benefits from your investment making it cost effective. Moreover, the handling of your money is done by market experts (fund managers) lifting the burden from your shoulders.
If you wish to confirm the returns on your SIP, you can use the Mutual Fund SIP Calculator to find out your net amount of gain at different time periods and choose the best plan as per your financial targets.
Investing using SIP has gained trust of the individual investors over the last decade, particularly due to the convenience, financial discipline and safety they provide. There are four different types of SIPs in which you can invest.
1. Top-up SIP: These SIPs allow you to increase you SIP amount at regular intervals.
2. Flexible SIP: This type of SIP provides the facility to increase or decrease the SIP amount as per the cash flow of the investor.
3. Perpetual SIP: Usually, a SIP is fixed for a stipulated period of time, such as 1 year, 3 years, 5 years and so on, but if the SIP is kept open without an end date, it is considered to be a perpetual SIP.You can always close this type of SIP by logging to Budwisefunds online mutual fund platform.
4. Trigger SIP: This is a specialized kind of SIP that is meant for very deeply involved and aware investors who know the financial markets in detail. In this kind of SIP, the funds from one Mutual Fund scheme are either redeemed automatically or switched to a different scheme as per the investor’s specifications when a certain Trigger event occurs. This trigger event could be a target for the NAV to reach a certain value or a certain percentage of the total investment. The target or the trigger point can be pre set by investors based on a pre-specified price, date or index level.
Depending on your financial goals, risk appetite and the amount you wish to invest, you can choose the best SIP plan for you. You can use online SIP Calculator to calculate your return on investment to find out which plan is the best for you.
Rupee Cost averaging and Value Cost Averaging are significant tools of mutual funds that help investors to get maximum value for their invested money in tensed scenario.
• Rupee cost averaging is a method of investment where money is invested in fixed amounts at regular intervals. In this approach, when prices are low, the resultant number of units bought increases and when the prices soar, the number of units bought automatically becomes less.
• Value based averaging is a method of investing in which the installment varies in accordance with the Units purchased every month instead of being fixed. In this approach, units purchased are fixed every month. This approach helps in better averaging as it decreases the investment amount when the unit price is low and increases the amount when the unit rate is high reviewing the investment every month. In this approach, market volatility is checked and returns improved. Also, you keep on accumulating same number of units every month.
You can use the SIP returns calculator to calculate the value of your investment on maturity.
• Scalable, easy to implement and requires less set-up time than any other saving method.
• Inculcates discipline. Every month, a fixed investment amount is deducted from your account. These funds are then invested in the Mutual Fund scheme selected by you.
• Great way to achieve financial goals and get good returns on investments.
• You need not to have huge funds before hand to begin investing. You can begin with a small amount as low as Rs. 500.
• Seamless process without any hassles as the amount is simply deducted from your bank account every month automatically. This begins after the approval from you through bank mandate.
In case you are not sure which SIP plan is the best for you, or you need to know what you will get at the end of the term, the Mutual Fund SIP return calculator can help you out. You can use the services of a Financial Advisor who can guide you about SIP investments using the SIP Calculator.
• Great investment tools and have lately won the trust of many people.
• Help to achieve financial goals and inculcate a habit of saving money.
• Do not require loads of money to invest.
• You can take small calculated steps and increase your investments as you go higher.
SIP uses the Power of Compounding to grow your money. That means the longer you hold on, the better are your chances of huge returns. Compounding can actually make you earn a fortune using SIP. For example, if you invest 1,000/- every month in a Mutual Fund SIP, at 12% it will grow up to 2.32 lacs in 10 years, 35.29 lacs in 30 years and 1.18 Cr in 40 years.
SIP means systematic investment of a fixed amount every month for a certain period of time. Lump sum on the other hand means investing a large amount at one go in a Mutual Fund scheme.
However, lump sum investment holds higher stakes as the timing of investment in this is crucial. If the market is low, it surely makes sense but otherwise SIP offers less risk and more calculated returns.
If you have made a decision to include mutual funds in your investment strategy but don't know how to get started, it's actually pretty easy.
• You have to consider, the best mutual fund depending not only on the returns basis, but also take into account your own goals, appetite for risk and choose the one that is best in its category group.
• Just remember that the key is to remain disciplined, rational, and avoid being moved by short-term price movements in the market.
• With long term financial objectives, you simply can’t move in and out of funds, incurring frictional expenses and triggering tax events.
5 basic steps to start investing in SIP are below:
1. Open a online mutual fund investment account with budwisefunds and get your KYC done in 5 minutes, if you are a first time investor.
2. Select an Asset Management Company(AMC) where you wish to invest.
3. Choose a fund based on your financial goals. There are different mutual funds that cater to different investor’s goals and risk appetite.
4. Decide SIP amount that you would like to invest in mutual funds through an SIP.
5. Start Investing - You’re good to go! Keep SIPing...
There is no doubt that mutual fund investment through SIP is considered as one of most the feasible options in India but here are some of the common mistakes to avoid while investing through SIP to achieve the financial goals easily:
1. Not Knowing the Right Amount to Invest in SIP: It is one of the biggest mistakes that a large percentage of the people in India commit while investing through the SIPs. Invest the right amount based on your goals else you can invest based on your zeal to grow your wealth.
2. Not Investing Large Amount: Most of the investors in the mutual funds, especially the first timers, tend be quite cautious while investing.
3. Waiting for the Better Stock Market Performance: People wait for the stock market to be bullish in order to start planning an investment, which is totally a wrong practice.
4. Not Selecting the Right mutual fund scheme: When you are formulating plans to invest in the mutual funds through the SIP, then you must ensure that the right fund has been selected.
5. Suddenly Stopping the SIP: Mutual funds investment can only be successful, if it is carried out or held for the long time. The power of compounding always works in the long term of 5 years or more.
Q1. What is a SIP date?
A. The date of the month on which your SIP installment is deducted from your account every month is the SIP date. You can choose the SIP date as per your choice.
Q2. What is the meaning of Frequency in context to SIP?
A. The Frequency is the interval of time that you set between placements of your SIP orders. Your first SIP order is placed on the start date and thereafter the next placement depends on the frequency you set like daily, weekly, monthly, quarterly,etc.
Q3. Can I cancel my SIP at any time?
A. Yes, you can cancel your SIP anytime you want. It generally takes around 30 days from the date of receving a cancellation request from the investor. Once cancelled, future purchase of Mutual Funds will not get deducted from your bank account and existing funds will remain as invested in the fund.
Q4. Can I resell my units bought through SIP?
A. You can resell the units of Mutual Funds bought at any time as per your need based on current net asset value (NAV).
Q5. How can I track my investment through SIP?
A. You can see the SIP orders placed in the order book of Budwisefunds investment portal .
Q6. How can the SIP return calculator help me?
A. The SIP calculator can help you to calculate the investment value of your regular savings based on returns and tenure.