What is SIP and how to invest? How does SIP calculator work?

Posted by swarali chavan on April 21st, 2019

When you opt for mutual fund investments, you have two options – either invest in lump sum or use the SIP method. Lump sum means investing the entire money in one go. SIPs allow you investment a set amount on a predetermined time. The period range could be daily, weekly, monthly, quarterly, half-yearly or yearly.

What is SIP? How to invest in SIP? The method is systematic, and the investment amount is as low as INR 500. The tenure for SIP investments could be 6 months or go on for years.

SIPS behave similarly like recurring deposits. However, the returns from SIP vary depending on the market factors.

SIP investment calculator:

The question that arises on many investors’ mind is, how to start SIP investment? You have the liberty to use the SIP calculator to gauge the estimated earnings you will receive at the end of the tenure. Also, you will know how soon you can fulfil your short-term or long-term goal corpus you receive from the amount invested.

How to use the calculator?

• Provide the amount you are comfortable investing. In case of SIPs, the amount is usually INR 500 and some SIPs require a minimum of INR 1,000 invested
• Check the rate of return you will receive on investment. This may not be exact but an estimate of return. Input that in the calculator
• The third aspect that you have to enter in the calculator is the tenure. The amount of time you wish to remain invested

You can change the variables multiple times and the tool is free of cost. These calculators do not include capital gains tax or inflation.

What are the benefits of using SIP calculator?

• Helps to make the investment fast. If done physically it could turn complex and errors could occur. The calculator eases the stress and provides you accurate results. It helps the investors make an informed decision
• The SIP calculator is favourable to use for those who hold financial background and those who do not
• The SIP calculator evens the playing ground for new as well as experienced investors. The accurate results help even the new investors earn the advantages from the mutual fund investments by estimating their future returns
• The calculators have easy interface that includes only few variables which enables faster results. This is one of the reasons why SIP calculator is popular and multiple fund houses promote it

This how to invest in SIP guide not only appeases the investors but also builds demand for online mutual fund investment.