What is a SIP Calculator and How to Make the Best Use of it?

Published:Dec 5, 202317:06
What is a SIP Calculator and How to Make the Best Use of it?
What is a SIP Calculator and How to Make the Best Use of it?

You can be a novice or a seasoned investor and still swear by starting a SIP (Systematic Investment Plan) to create a corpus to come at your rescue later in life. This is because it is viewed as a more reliable and efficient way of investment.

The effective use of the SIP calculator has added to its popularity. It’s an online tool that estimates your maturity benefit against the investment made.  Having an estimated projection of returns can encourage an individual to start SIP if they haven’t already. 

Before we go deeper, let us discuss what is Systematic Investment Plan (SIP) and how it works.

A SIP, as it is more popularly known, is a provision offered by mutual funds, allowing investors to invest in a staggered manner. Investors pay a fixed amount regularly in their selected mutual fund scheme without compromising the maturity benefit.

You can use a SIP calculator to estimate the cash value you may receive from your investment to know the potential monetary gains. 

What is a Systematic Investment Plan's Minimum Value?

You can start with a minimum investment value of ₹500. There is no cap on the maximum investment limit.

You can add your investment value into the SIP calculator to determine the overall return rate.

Benefits of Choosing SIP Investment

Now that you know what is systematic investment plan, it’s time we discuss the benefits. Some of the many benefits of starting a SIP investment are:

  • You become more disciplined with your investment and savings.
  • There's no need to invest a lumpsum. You can start with a small amount and invest it regularly. 
  • Make the most out of monthly returns by reinvesting the cash value received. It is possible only when you choose the growth option before starting the SIP.
  • Flexibility in terms of amount invested and no obligation of depositing the investment regularly.
  • Manage your SIP investment from the comfort of your home. It is possible because leading AMCs (Asset Management Company) now offer online portfolio tracking.
  • Safeguards your investment amid market volatility. Because your investment is paid regularly, you don’t have to worry much about the market ups and downs. You won't lose much even when there is a drop. 
  • SIPs help in reducing the average investment cost. So, a SIP investor may gain equal returns as a lumpsum investor despite investing a relatively smaller amount in one go. It is primarily because of the rise and fall in markets. This benefit may not necessarily reflect when estimating our returns using the SIP calculator.

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