What is SIP Mutual Fund?
Mutual funds and other investment companies offer investors a variety of options to invest money in, one of them being SIP investment plan. This is a way of investing in mutual funds that allows investors to invest small amounts of money regularly on a chosen frequency, instead of having to invest a lumpsum amount at once. SIP mutual fund offers flexibility, convenience and ease to investors, especially the new ones.
Advantages of SIP
SIP mutual funds has several advantages, such as the rupee cost averaging. Rupee cost averaging means, the investors accumulate units regularly through the high and lows of the market and thus get different NAV prices on different levels of the market. When you accumulate units at highs and lows of the market, you benefit by cost averaging without having to worry about market levels.
Another benefit is power of compounding which ensures that you earn return on returns apart from returns on principal investments.
Apart from rupee cost averaging and compounding, SIP investment plan also helps investors to grow their wealth, if they can make an early start. For example, if one starts investing Rs 5,000 from the age of 20, an amount of over Rs 50 Lakhs can be created easily when one is aged 40 that is after 20 years (assuming 12.5% annualized returns). Thus you can see, SIP mutual funds is a powerful way of building wealth.
SIP Calculator
An online tool which can be highly effective in computing complex financial calculations is the SIP Calculator online. This is a fast, easy and convenient financial tool that can help investors know the returns they can expect from their SIP Investment plans in the future. By taking an estimated return over a period of time, this calculator helps one know their possible corpus. It not only saves one from manual calculations but also instils confidence in investors regarding what they can expect from their mutual fund investments.
Another mutual fund SIP Calculator online that can helps investors is the target SIP calculator. Here, you can input the goal amount that you wish to accumulate after a certain period of time. This calculator then tells you how much to invest through monthly SIPs so that you can reach the targeted goal amount. For example – Ravi is planning for retirement goal and his expected corpus is Rs 2 Crores after 25 years and he assumes annual returns of 12%. By using the SIP calculator online, Ravi finds that he need to save only Rs 10,645 to meet this goal!
Conclusion
SIP investment plan is one of the most popular and disciplined methods of making mutual fund investments over the long time period. We have discussed the several benefits it offers to the investors such as power of compounding, wealth creation and rupee cost averaging. We also highlighted a free online tool which facilitates the planning part of the investment – SIP calculator online. With the right financial advice and guidance, SIP mutual fund can truly help one reach their various future financial goals.