When it comes to a good and wise investment in India, a SIP (Systematic Investment Plan) is one of the most opted investments by potential investors. This is because it provides a disciplined and flexible approach to investment, with the potential for higher returns and tax benefits.
Nowadays, in the modern digital era, availing such an investment scheme is easy from certain mutual funds apps in India. For individuals who are looking to create wealth over the long term with a disciplined and diversified approach, it is one of the best options for them.
What is a SIP?
A systematic Investment Plan (SIP) is a method of investing in mutual funds or other investment products. An investor can invest a fixed amount at regular intervals, typically monthly or quarterly.
Under this investment instrument, the investor authorizes the fund house or broker to automatically deduct a fixed amount of money from their bank account and further invest it in a mutual fund scheme of their choice. This ultimately helps the investor regularly in a disciplined manner, irrespective of market conditions.
It allows the investor to benefit from the concept of rupee cost averaging, where they buy more units of the mutual fund scheme when the market is down and fewer units when the market is up. This helps to average out the investment cost and potentially generate better returns in the long run.
What is a SIP calculator?
It is a tool that helps investors to calculate the potential returns on their investments made through a Systematic Investment Plan (SIP) in mutual funds. It considers the invested amount, duration, and expected return rate of the mutual fund scheme.
This tool basically computes the returns based on the concept of compounding. Here, the investment returns are reinvested to generate further returns. The interest amount earned in the previous period is added to the principal amount to calculate the interest for the next/upcoming period.
To use this tool, the potential investor needs to input the investment amount, duration, and expected return rate. The tool then computes the returns for each year and provides the total returns and the final value of the investment at the end of the period of investment.
This tool helps compare the returns of different mutual fund schemes and ultimately make an informed investment decision.
What are the tips for choosing the best SIP interest calculators for your investment goals?
The SIP interests calculator should be accurate and reliable in its calculations. Keep in mind that it should take into account all relevant factors.
The calculator should have a user-friendly interface that is easy to navigate.
Choose a tool from a reputable source such as Bajaj Finserv. It is a pretty reputable organization offering many investment schemes at your fingertips.
SIP calculator should allow for the customization of investment parameters. These include the amount of investment, duration, frequency of investments, and expected rate of return.