How Do Sip Calculators Work
A SIP plan calculator works on the following formula
M = P × × .
In the above formula
- M is the amount you receive upon maturity.
- P is the amount you invest at regular intervals.
- n is the number of payments you have made.
- i is the periodic rate of interest.
Take for example you want to invest Rs. 1,000 per month for 12 months at a periodic rate of interest of 12%.
then the monthly rate of return will be 12%/12 = 1/100=0.01
Hence, M = 1,000X x
which gives Rs 12,809 Rs approximately in a year.
The rate of interest on a SIP will differ as per market conditions. It may increase or decrease, which will change the estimated returns.
S To Invest In Systematic Investment Plan Online
Investment in mutual funds through the Systematic Investment Plan has become increasingly popular over the last few years. This is because they allow you to invest small amounts regularly for as long as you need so that you can spread out your risk and build long term wealth. But, before you decide to invest in a sip mutual fund, it is important to know what an SIP is and the process to get started on your SIP investment journey. Doing so will help you get into a healthy habit of investing your money, minimizing your risks, and achieving your financial goals over time.
- What Is a Systematic Investment Plan ?
SIP is an investment tool that allows you to invest a specific amount periodically towards your preferred mutual fund scheme. The frequency of the investment and the date on which to invest small amounts can be decided by the investor rather than making a single full investment.
SIP investment plans allow you to stagger your investments over time and have the feature of an auto-debit from your bank account each month. Additionally, you can pause and restart investments as per your comfort. SIPs help you harness the power of compounding as an investor. Over time, these investments can help you meet your long term financial goals in a steady manner. Typically, disciplined investors set aside a part of their monthly salary to be automatically invested through SIPs.
- How to invest in SIP online?
1.Identify your investment objective
2.Complete the KYC details
What Is A Sip Calculator
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.
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 .
This calculator will calculate the wealth gain and expected returns for your monthly SIP investment. Indeed, you get a rough estimate on the maturity amount for any of your monthly SIP, based on a projected annual return rate.
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Cons Of Sip Investment
There is some criticism as well in SIP. Lets have a look at the cons of SIP Investment.
- No Guaranteed Returns SIP does not always give you guaranteed returns. It always depends on the time of entry and exit. If you enter in a bearish market and exit during a bullish market, then only you will get good returns. In contrast to it, you may face loss.
- Cost Investing through SIP bears some cost as the company manages all our funds with the help of experts fund managers, the cost has to be borne by investors for that.
- Insufficient Funds Once the ECS mandate lodged and you have started SIP, funds should always be there in your bank account. Otherwise, if got dishonored you have to give a penalty, and for that month units would not be purchased.
- Delay in Units Purchased Unit purchase doesnt happen in real-time. The date when your amount got deducted against the unit purchase, the units dont reflect in your dashboard at the same time. Rather it takes 3 working days time to reflect the purchase. So the price of a unit on the day it gets purchased actually may differ from the day your amount gets deducted.
- Risk Risk is always associated with mutual fund investments. Investing in mutual funds through SIP is not as safe as deposits in banks and Post Office.
- Aimless SIP If you have started SIP just for the sake of it, it will get no good returns until you plan your financial goal and stick to it. Aimless SIP wont run longer and generally fails.
Decide Investment Amount And Scheme Plan And Option
This again is an important step, where the investor has to specify the SIP amount and choose the scheme name. The investor also has to decide the scheme plan and option. Generally investors can go with either regular plans or direct plans and can opt either for growth option, dividend payout option or dividend reinvestment option. Please note that investor cannot opt for dividend reinvestment option if investing in ELSS scheme.
Most of the AMCs provide an online SIP calculator to help the investor to know the amount to make a decision based on the financial goal, and how much to invest daily/ monthly/weekly etc. to accumulate for the desired goal corpus. Investor can invest accordingly by knowing the amount with the help of this online tool.
If the investor has already decided or know the exact SIP amount then he or she can straightaway fill up the investment amount in the box provided without taking the help of the calculator.
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How To Start A Sip Online
Investing in mutual funds through Systematic Investment Plans helps the investors to inculcate financial discipline into their lives by allowing them to invest regularly in the mutual fund scheme of their choice. The investors may choose the mutual fund scheme as per their risk appetite, financial goals, and investment horizon, and register a SIP therein to make periodic investments. You may register a SIP online and reap the benefits of the investment with a click of the mouse and the investors need not physically visit the office of the mutual fund house to make investments after that.
This blog aims to discuss the procedure tostart SIP online below:
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Wondering how you can invest in SIP?
Read along to learn the process and enjoy the galore of benefits that accompany this investment plan.
Steps of Investing in SIP In a Nutshell
Step 1 Identify and assess your risk appetite
Before you decide to tread into the world of SIP or investment in general, make sure to ascertain your capability to weather market risks.
One rule of the thumb to gauge an investors risk appetite is the older people are, the higher is their financial liability and lower the risk appetite.
However, you must also understand that a high reward aspect accompanies a high-risk factor. It means, in order to generate higher returns on your investments, you will have to be ready to weather greater risks.
So, strengthen your risk appetite accordingly and do not forget to develop effective risk mitigating strategies to cushion the same successfully.
Step 2 Recognise your investment objective
Once you have ascertained your risk appetite, you need to understand what the driving force behind your desire to invest is.
In other words, you need to understand your financial goal or investment objective and plan to realise it accordingly.
Typically, individuals tend to invest with either one specific financial goal in mind or a plan to achieve multiple ones. Also, having a fair idea about the investment goal comes in handy to build a significant investment portfolio.
Step 3 Select a profitable mutual fund
Benefits of SIP
Limitations of SIP
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Become Mutual Fund Kyc Compliant
– It is mandatory to comply with the mutual fund KYC requirements for investing in mutual funds. You can become mutual fund KYC compliant online using the eKYC channel. Many fund houses provide eKYC facility. Visit the website of one such AMC and start the process.
You should fill in the basic information online and upload a soft copy of your PAN, Aadhar and address proof to support the details filled in the first step.
Knowing When To Enter
Even if you do the right research and analysis and pick a good growth stock, timing your entry and exit is still important to maximise the long term returns in equity investing especially in a portfolio that is not diversified. The entry has to be timed so that the value in the stock is not already factored into the price. Further, market corrections may present opportunities to buy. In order to be able to do this effectively, you will need to put in a considerable amount of time and effort which is negated in an SIP in stocks where equity investing pretty much runs on its own, once you set it up.
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Pros Of Sip Investment
Some of the advantages while investing through SIP are mentioned below
- Liquidity Unless you have opted for close-ended mutual funds. It is easier through SIP to buy and exit when you do not like the performance of your scheme with no big hole in your pocket.
- Free From Market Volatility While investing through SIP, the investor wont have to worry about volatility in the market as at regular intervals the unit got purchased and added in the portfolio. Their money fetches more units when the price becomes lower and vice-versa.
- Petty Investment SIP can be started with a very small amount. Funds like Reliance Small Cap allows starting with just Rs 100. Those who want to give a try about their first SIP can easily opt for mutual funds that accept a very low monthly SIP amount.
- Better Than RD in Banks The returns of SIP over a long period of time is much more than the same amount you invest in RD in a bank. Most of RD gives an interest of 6-7% annually for which TDS also deducted if interest cross a certain limit.
How To Select The Best Suited Mutual Fund For Sip
The concept of selecting the best mutual fund is a myth. This is because a mutual fund performing today does not guarantee to perform the same in the future. Similarly, todays worst-performing fund can become the best performing fund tomorrow.
Normally, retail investors look at the fund returns for the last 3-5 years before investing. However, there are certainly other factors to consider. The following are things that investors must consider to select the best mutual fund for SIP
- Investment objectives like children education, retirement planning, etc.
- The time horizon for investment For instance, 1 year or 3 years or even 10 years. Based on the time horizon, the investor can choose a debt fund or equity fund.
- Investors risk tolerance level
Based on these attributes, investors can select a best suited mutual fund for SIP investment. In addition, while selecting a mutual fund, investors must also consider the following factors
- Fund performance against benchmark
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Know The Investment Objective And Your Risk Appetite
You should first understand your risk tolerance before investing in mutual funds. After you have assessed your risk appetite, it is vital to understand why you want to invest and define your financial goals. It is essential to determine the objective of your investment to fetch an ideal portfolio mix of debt and equity.
What To Do After Kyc
How to invest in SIP online after completing the KYC is very simple! After you have become a KYC complaint, what you need to do, as an investor, is that you need to go to the fund companys website that you want to invest in. Go to the link that reads as register now or new investor. Find the link and open it. Now, the investor will get a form that they have to fill up. Basic details have to be filled. A username and password have to be selected and generated so that it can be used for online transactions. Bank account details of the investor also have to be entered into the form. Then, the investor has to select an amount for the monthly debt that the bank account will transfer to the mutual fund company for investing in it. This is called auto-debit. Then, the investor has to log into their account with their new username and password and then they have to select the mutual fund scheme that they want their money to be invested into. Then, the dates for the money to be invested have to be chosen. The dates can be in accordance with the ease and the convenience of the investor. The SIP plan will start running after a period of 30 days to 40 days after the process has been finished.
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How Can A Sip Return Calculator Help You
SIPs are a more lucrative mode of investing funds compared to a lump sum amount according to several mutual fund experts. It helps you become financially disciplined and create a habit of savings that can benefit you in the future.
A SIP calculator online is a beneficial tool, which shows the estimated returns you will earn after the investment tenure.
Few of the benefits of SIP calculators include
Validating The Investor Status
The first page will typically prompt the investor to input the PAN . The system checks the status of the investor with the help of PAN, as it is a 10-digit unique identification number issued by the Income Tax Department. The system checks for the existing investments of the investor and check the KYC registration status for the investor.
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Decide Payment Mode And Date
After the investor has decided whether to make a daily, weekly, monthly or quarterly SIP investment, he/she has to selects date/s and to make the payments for the first SIP installment. It is important to choose this date wisely. Now the investor has to select the mode of payment – There are few options as the amount can be auto debited from the investor’s account through registration of OTM , Net banking or NEFT/ RTGS payment.
How To Invest In Sip With Screen Shots
Start your SIP investment right away with the help of simple steps provided below.
Time needed: 4 minutes.
Select the right mutual fund you want to invest and click on invest in this fund.
Verify your payment and you will receive the success confirmation on your dashboard.
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By Step Guide On How To Invest In Sip
Step 1: Log on to any platform of your choice mentioned above and open an account by giving your email ID and mobile number.
Step 2: After opening the account it will ask for the required documents. Scan the documents and upload them.
Step 3: Aadhar based eKYC verification. After completing the upload of PAN if your KYC is not registered before it will ask for Adhar based eKYC verification or you have to send the signed documents through courier.
Step 4: If you do through eKYC verification, within 2-3 minutes you will get your online dashboard.
Now you have to choose a mutual fund. Here you can pick any mutual fund scheme of any AMC.
How to pick mutual funds for yourself.
You can follow the table below to pick right mutual fund to achieve your goal.
Image courtesy: Economictimes.com
- Based on your risk appetite and objective of investment choose a mutual fund. If you want to get higher returns on investment than you have to increase your risk appetite.
After assessing your risk tolerance you have to think what is your financial goal. It is imperative to have your goals clear so that you can get the right portfolio mixture of equities and debts.
- Filter for the AMCs having a presence in the market for long.
- Do not hurriedly pick any mutual fund just for the sake of it.
If not able to understand which one to pick, do some little research. Ask any financial planner. Take some time and then pick.
Image courtesy: Groww.in
Monthly SIP amount in the marked space in blue.
What Is Sip In Stocks
SIPs in mutual funds, have over time, proved their ability to minimize the risk of making ill-timed investments and have helped investors bring discipline and the power of compounding to the process of wealth building. SIP in stocks seeks to extend this approach to investing in equity as well. Known by different names by different brokers, SIP in stocks, makes purchases of stocks of a predetermined amount / quantity at regular intervals . By opting for an SIP in stocks, you will be investing directly in equity and will therefore need a demat and a trading account. Brokerage charges too will apply on the transactions.
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Sip Online : Its Benefits
Systematic investment plan has the upper hand over any other investment methods due to multiple benefits. Various advantages that can be grabbed by investing in SIPs are described below:
All these advantages help you to attain your financial goals in the most beneficial manner. So, it is better to start investing at an early stage to achieve your financial goals on time.