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What is the use of SIP Calculator?

One of the most popular investment options when it comes to mutual funds is known as Systematic Investment Plan or SIP. The reason that SIP has earned its name in recent years and is considered by large, small and medium investors is based on the fact that it promises lucrative returns when invested for a long term. The investor can invest in regular intervals; the frequency of investments may be monthly, weekly or quarterly. The policyholder has to contribute a fixed amount each month towards investment in mutual funds which shall be auto-debited from the policyholder’s account. One of the advantages of investing in a SIP is that it is flexible. The policyholder can freely increase the amount of investment or discontinue it at his wish anytime.

In this article, we will learn about SIP investments and how to start investing in SIP. Also, we should take a look at the uses of SIP Calculator and how it can give you an estimate of returns that should accrue to you after a fixed term.

What is SIP?

Systematic Investment Plan or SIP is a popular method of investment in India. It is ideal for small investors who would like to invest small amounts each month than invest a lump sum in mutual funds. The investor may choose to invest every week, monthly or quarterly. A fixed amount from the investor’s bank account is invested in buying a certain number of units at the current market rate, and more units are added under the investor’s name every time he invests an amount. SIPs promote the habit of small savings and investments among small investors.

Why invest in SIP?

There are myriad reasons one should consider investing in SIP, more because it pays off high returns in the long term with the guarantee of substantial growth in investments and involves fewer market risks as compared to other equity investments. Also, SIP investment is considered a balanced investment. More units are bought when the price is low and fewer units are purchased as the price goes higher and therefore, the cost per unit, in the long run, is lower than the actual cost. It is a smart choice for those who want a deduction on their income tax returns.

What are the benefits of Investing in SIPs?

The list of benefits an investor may avail from investing small amounts regularly in SIP runs long. Here are a few points to brief you with the benefits of using SIPs:

Ease of Usage- SIP is easy to understand and use. Not many terms and conditions are laid down regarding SIP investments, and therefore, the ones who are new to investing in mutual funds may consider the transparency of this investment and start with it easily. All that the investor is required to do, is to choose one among the various mutual fund schemes available and auto-debit a fixed amount from the bank account into investment each month. It is easy to register for SIPs online which is a fast and hassle-free process. It takes about three weeks for the application to get validated by the officials after which the investor gets free access to his mutual fund's accounts.

Ideal for cautious investors- This investment is ideal for investors who aim at greater gains in the long term and wants to avoid the turbulence of the market and thus, the risk. The investor is not required to make any lump sum payment and only have to pay small amounts regularly, the minimum amount for the investment being Rs.5000. The amount may also be brought down to Rs. 500 in a week or month. Thus, the mutual fund investor need not worry about the budget. Even investors who do not have a regular source of income may invest in SIP.

A flexible investment- SIP is highly flexible, and it is up to the investor to continue with the fund or not. In case the investor is unable or unwilling to invest further, the plan can be discontinued. There are also no penalties if the investor decides to stop going on with the investment.

No charges for opting for SIP- The investor does not have to pay any additional charges and all investments are used to buy units which add up under the investor’s lot. There is no extra deposit you need to make for using the SIP mutual fund scheme.

No burden on investors- While investing in SIP you don’t have to worry about being a share market professional. It is okay even if you have little idea about investments and mutual funds because investing in SIPs free you from any speculation regarding volatile markets. All you have to do is invest regularly and be rest assured that your investment is making a steady growth.

If you are still pondering on why you should invest in SIP consider your future goals. For instance, for someone who is 25 years old and wants to buy his own house and have his own car and planning to save up for the future contingencies as well in the next 20 years shall not benefit much only from investing in bonds. The reason is quite simple- inflation would be higher, and the returns shall not be sufficient to meet all his goals. But, being a small and cautious investor, he does not want to invest in equity lest there should be a high risk of losses. What are the options the 25-year-old has to invest in so that he is assured of the safety of his investments along with hefty returns that allow him to meet his goals in the forthcoming years? The answer is SIP which is a safe and lucrative option at the same time.

How to get started with SIP investments?

The initial steps of getting started with SIPs involve setting a specific financial goal. Take in considerations your biggest initiatives that require financial funding in the long term. For example, Mr. X’s long-term goals might include the acquisition of capital to start his own restaurant in the next 20 years. Mr. Y may wish to invest to have enough funds to finance higher education for his children in the best universities. Similarly, considering your future goals, you may draw an estimate of your financial requirements which is the very first step of investing in SIP. The investor has to set a timeline next. The investor must choose investment tenure though he/she can choose to discontinue whenever he/she wishes to. Use a SIP Calculator to know how much you should invest regularly as to get the amount enough to meet your future goals after the tenure of investment ends. You may also choose to consult a financial advisor who shall guide you with a suitable investment plan for your need.

Here are the three steps that you need to go through to start with investing in SIPs online:

Arrange the necessary documents- There is a need for the investor to fetch just the basic documents to start investing in SIP such as his PAN Card, driving license or utility bill that may qualify as an address proof, a chequebook and passport size photograph. Aadhar number of the investor is not mandatorily required but providing Aadhar details shall simplify entire the process. Having a high-speed internet connection is necessary so that the entire process shall continue smoothly.

Comply with your KYC (Know Your Customer) - As an investor, you must complete your KYC requirements in the first place. You may opt for the e-KYC channel which is provided online by some companies. The basic information is required to be provided like name, contact number, date of birth, address etc. The process requires you to upload a soft copy of PAN card and your address proof. The process is completed with a video call to confirm the investor’s physical existence. The process may also be completed providing the Aadhar details which eliminates the need for a video call. This only a one time process and the investor go through it just once even if he invests in mutual fund schemes of different companies.

Start Investing in SIP Online- After you have successfully completed your KYC, you may register yourself as a SIP investor with the fund house that you choose. All you have to do is click on ‘Register Now’ button or search for ‘New Investor’ link and fill the form with all the details it requires. The investor needs to choose a username and password to transact online. The bank account details of the investor shall also be a requirement in order to set up the auto-debit of a fixed amount at regular intervals chosen by him. One may start investing by logging into your SIP portal with the username and password and selecting the desired scheme. It takes about 30-40 days for SIP to start.

How does a SIP calculator work?

With the use of a SIP calculator, the investor can compute the absolute value of the amount he invests after a certain period of time. The investor needs to provide information on the accumulated amount, the investment period and the rate of returns. It shall give you a clear estimate of the amount you should invest (say monthly) to your total earnings accrued to you over the investment period. The steps that the investor needs to follow while using the calculator are:

1: The investor needs to provide details on the monthly amount that he can invest in SIP. The minimum amount that may be invested in case of mutual funds is Rs. 500/month. For other investment schemes, the minimum amount goes up to Rs. 1,000.

2: The calculator calculates the estimated returns on the basis of the rate of returns from the particular investment scheme. To derive the possible rate of returns, we need to analyze a figure based on the fund’s track record.

3: The last step in the process requires the investor to provide details of his tenure of investment. The minimum tenure of investment in SIP is six months, but it is recommended that the investor invests in SIP for a long term so as to gain higher returns.

SIP calculator is available online and is provided by almost all the fund houses. All you have to do is log into the website of the fund house you desire to invest in and search for SIP calculator. You can use SIP Calculator for free. You may also explore various options you regarding the amount of monthly investment by changing the variables in the calculator. Something that a user must keep in mind while using a SIP calculator is that the output accounted is after taking into consideration the possible rate on inflation and capital gains tax. You may also use a lump sum calculator in order to know the maturity amount of a one-time investment by the investor. The lump sum calculator also requires the investor to provide details on the number of investments, the estimated rate of return and the tenure of investment to calculate the total amount due to him/her at the end of the tenure.

Benefits of using a SIP calculator

Now that we know what a SIP calculator is and what it is used for, we can sum it up in pointers that count the benefits of using a SIP calculator:

1: The calculator is simple to use and is a quick process to derive the estimated returns that would be accrued against the small monthly investments. Therefore, investors can strategically make their investments plan to meet their financial goals in the long term.

2: There are no extra details required other than the details about the investor's monthly investments, the tenure of investments and the rate of return on the fund they invest in. Thus, the interface is user-friendly.

3: The calculators can be used online and free of any charges.

4: The calculators make it easier even for the first time investors to know the nooks and cooks of SIP investments.

SIP is the most dependable investment instrument on which most small investors depend in order to mobilize their small savings and invest them to meet their future financial goals. Invest in SIP and get yourself a guarantee of fulfilling your goals in the future even when inflation elevates.

Written By: PolicyBazaar - Updated: 17 October 2018
What is the use of SIP Calculator? Reviews & Ratings
4.3 / 5 (Based on 25 Reviews)
(Showing Newest 15 reviews)
Raj
Ooty, September 02, 2020
Start with minimum amount
I have recently got the SIP plan from the policybazaar and it is really easy to get the plan from the online market. Not only this you can also start from the minimum amount of Rs. 500. It is very much convenient in nature and I really love my plan. Thank you policybazaar.
Adnan
Kohima, September 02, 2020
Great assistance
I have got the good amount of benefits from the policybazaar. The customer care team of policybazaar is very good and they understood my query very well. Thank you so much team for better assistance.
Suraj
Yamunanagar, September 01, 2020
Long term and beneficial
It is always a preferred thing that to get the SIP plan for the longer period of time. I really like the plan as I wanted it to be invested for at-least 10-12 years so that I can get the optimum profit out of the same. Thank you policybazaar.
Sonu
Bhilaad, September 01, 2020
Investment plan
I have taken the pension plan from the policybazaar and it is one of the best investment plan. It has the long term effect on the person and I can easily invest and can get the better returns in the future. Thank you policybazaar.
Ananya
Islampur, May 25, 2020
Online process
The whole process of buying the policy is on online basis. It was quite easy as I searched on website and explored various plans. I found it good and bought one.
Ashish
Sarsawa, May 24, 2020
Convenience
I am very impressed with the services of policybazaar. They are really quick. Also, it is very convenient to buy the investment plan.
Kushal
East Midnapore, May 23, 2020
Long term gains
It is the process of long term gain and to sustain our future from certain hurdles. As the things have become expensive and we should save money. So, these investments plans helps in saving money.
Divyanshu
Hagaribommanahalli, May 22, 2020
Great support system
I love the services of policybazaar and the employees working there. It’s really nice that they gave me a lot many choices related to the investment plans. Unique way to invest.
Vijay
Mansur, May 21, 2020
Choices are given
While you are planning to take the SIP from policybazaar. You can have a lot many choices to choose out of different investment plans. I got the best one and I like it.
Manish
R.g.pur, May 11, 2020
A call away
I am happy that I bought my SIP plan from policybazaar. As they are just a call away. I was having a problem with my SIP and they resolved in few minutes.
Kishan
Sialhawk, May 10, 2020
Flexibility
I can see that SIP are flexible in nature. We can choose any kind of Mutual fund and also the amount which we have to invest. Quite simple.
Jatin
Vizianagaram, May 10, 2020
Helps in financial way
It helps me in dealing with financial things. As nowadays everything has become too costly. But with the help of SIP I can manage with my finances and can save money every month for a long term investment.
Vijay
Dabhoda, May 09, 2020
Good customer service
The customer service team of policybazaar is very nice. I was in a doubt before buying a SIP plan, but with the help of them I got to know about a best plan which is according to my budget.
Rakesh
Adimali, May 07, 2020
Best Returns
I recently purchased the SIP plan for me and for my wife. I found it totally good and apt for us. It is a long term investments with great number of benefits. Thank you team policybazaar for such nice plan.
Tripti
Agalpur, April 08, 2020
One stop and best plans
I got the SIP plan with the help of policybazaar. It is one stop solution. With great returns and monthly plan I am very satisfied. If so ever I need help from the customer care team they are available to help me.
Madhuban
Zotlang, April 06, 2020
Great Returns
It is a great source of return. I have started doing it from last 2 years and I am feeling relaxed that after a certain age I would be having a good amount of money with better returns.
Mustafir
Agra, April 03, 2020
Good policy
SIP plan is quite trending and useful nowadays. It has reflected a great impact on our society. As people are more concern about future planning and saving the money. Even the SIP plans gives us good returns after a certain period of time.
Varun
Adivada, March 31, 2020
Good customer care
The customer care team is quite helpful and nice. I got full and accurate information from them. They are not so disturbing. They have a good knowledge related to the product.
Vaibhav
Ahmedpur, March 27, 2020
Easy to get plan
It is easy to get the plan. I just visited the website of policybazaar. And I got various plans. Then I called the customer care team and they explained me about each and every plan. I chose the best one.
Subhas
Ahmedpur, March 23, 2020
Good plans
I visited the website of policybazaar and found good number of plans for future savings and investments. SIP is very important for everyone who wants a good satisfaction and more savings in his or her life. I would love to recommend all these plans to my friends and family.
Keshavkant
Jatga, January 20, 2020
Reach Your Goals
After a certain period of time you can reach your goal. I have seen that higher you invest there will be higher risk but you can earn well. But lower the investment low risk and low returns. Well, I have started with a less amount so that I can check and analyse. But gradually after sometime I will get a good amount. Thanks policybazaar.
Jaikant
Pathankot, January 13, 2020
Earn Money on your Investment
It is a good way to invest money and you can earn benefits and profits in your money only. A convenient way to invest and utilise your amount. Initially I found it little bit confusing but after a while everything is being okay. People who are planning in a long term investments can do such things.
Sailja
Satlasana, January 08, 2020
Systematic Investment Plan
It is a good plan. My friend recommended me to get this plan so that I can invest some amount of money into this. Ultimately I will gain benefits after a certain period of time. It is a good plan by policybazaar and I would recommend to everyone.
Zakir
Machantola, December 31, 2019
Systematic way for making money
I have gone through the plans of policybazaar. And found that it is a systematic way to invest and gain money. The whole process is simple and you can check on time to time basis regarding your investments.
Vishal
Ara, December 26, 2019
Good Returns In Long Term
I feel that while investing into this plan I have gained knowledge regarding the same. Also, after a certain good investment I will get the good returns. Though it is long term process but surely will be good for my future. Thank you team policybazaar.