What is SIP?
Systematic Investment Plan (SIP) is a method of investing in mutual funds where you invest a fixed amount regularly (monthly, quarterly, etc.) instead of investing a lump sum. This approach helps in:
- Rupee Cost Averaging: Reduces the impact of market volatility
- Disciplined Investing: Creates a habit of regular investing
- Power of Compounding: Your money grows exponentially over time
- Flexibility: Start with as low as ₹500 per month
How to Use the SIP Calculator
- Enter Monthly Investment Amount: Input the amount you plan to invest every month (minimum ₹500)
- Set Expected Annual Return: Enter the expected annual return rate (typically 10-15% for equity mutual funds)
- Choose Investment Period: Select how long you want to continue the SIP (in years)
- Calculate: Click the calculate button to see your projected returns
- Analyze Results: Review the total invested amount, expected returns, and maturity value
Understanding the Results
The SIP calculator provides three key metrics:
- Total Invested: The total amount you will invest over the entire period
- Expected Returns: The profit you can expect from your investment
- Maturity Value: The total amount you will receive at the end of the investment period
Tips for Effective SIP Planning
- Start Early: The earlier you start, the more you benefit from compounding
- Be Consistent: Don't skip SIP installments even during market downturns
- Increase Gradually: Increase your SIP amount annually by 10-15%
- Choose Right Funds: Select funds based on your risk tolerance and goals
- Review Regularly: Monitor your portfolio performance annually