SIP Calculator

What is SIP?

Systematic Investment Plan (SIP) is a way of investing in mutual funds by contributing a fixed amount of money at fixed intervals. SIP inculcates a habit of disciplined investing in an individual. It is beneficial for both new and experienced investors who want to create wealth over a period of time. You can start SIP investment with as low as Rs 500 per month. You can invest in SIP either weekly, monthly or quarterly.

What is a SIP Calculator?

SIP Calculator is a tool which helps you calculate returns on your SIP investments. It is used to estimate the future value of your SIP investment based on your monthly contribution, investment duration, and expected rate of return. It is a very easy-to-use tool which gives you a fair idea of how much your investments will grow over a given period of time.

How can a SIP return calculator help you?

An SIP calculator helps you estimate the future value of your mutual fund investments. It helps you in making the right investment decision by taking into consideration a few important factors like your monthly contribution, investment duration, and expected rate of return. It also saves you from the hassle of manually calculating the value of your investment. With the help of a SIP calculator, you can determine how much you need to invest to reach a financial goal.

How do SIP Calculators work?

SIP Calculators use a simple formula to estimate the future value of your investments.

The formula used by SIP calculators to calculate returns is:

Future Value : (FV) = P * [(1 + i)^n - 1] / i
where: P = Monthly investment amount , i = Expected annualized rate of return , n = Number of years

How to use Religare Online systematic investment plan calculator?

You can use the Religare Online SIP calculator by following a few simple steps.

• Choose the amount you want to invest regularly—monthly, quarterly, or annually.
• Enter the expected rate of return on your investment.
• Specify the investment duration.
• Click the ‘Calculate’ button, and the calculator will instantly display your estimated SIP return

Advantages of using Religare Online systematic investment plan calculator

Religare Online SIP Calculator is a very easy-to-use tool to calculate the future value of your investment. It helps you in accurate projections to determine how much your investment could grow over time. It helps you in efficient financial planning by aligning your investment goals with the amount you need to invest regularly. It also helps in time-saving by not letting you calculate the potential returns manually.

Types of SIPs

Regular/Fixed SIPs

In regular/fixed SIPs, investors invest a fixed amount of money at regular intervals (monthly or quarterly) into a mutual fund. It is best for investors looking for stability and discipline in their investment.

Flexible SIP

In flexible SIP, investors can adjust/change their contribution amount based on financial conditions, market scenarios, or personal preferences.

Top-up/Step-up SIP

Top-up SIPs allow investors to increase their investment amount at regular intervals. It is best for iInvestors who expect their income to grow and want to gradually increase their investments.

Perpetual SIP

Perpetual SIPs have no fixed tenure, allowing investors to continue investing for as long as they wish to. It is best for long-term investors who want to continue investing over a long period without having to renew or change the plan.

Trigger SIP

Trigger SIP is where your investment is triggered based on certain predefined conditions, rather than being executed on a fixed date every month. It is ideal for investors who want to capitalize on market fluctuations and invest when specific predetermined conditions are met.

Benefits of SIP

Disciplined Investing

SIP inculcates a habit of disciplined investing in investors by requiring them to contribute a fixed amount of money at regular intervals.

Power of Compounding

SIPs allow your investments to grow over a period of time through the compounding effect. The earlier you start, the more your money can accumulate for wealth creation.

Diversification

SIP helps you invest in a diversified portfolio of assets, as mutual funds invest in a range of securities like stocks, bonds, and other instruments. This diversification helps spread investment risk and reduces exposure to market volatility.

Flexibility

SIP allows investors to increase, decrease, pause their investments based on their financial objectives and circumstances.

How to start SIP investment?

Starting an SIP investment is very easy. The first step to start an SIP is to keep all your documents ready - ID proof, PAN card, Address proof. It is also mandatory to get your KYC done before investing in any financial instrument. Then, you need to choose the right mutual fund which aligns with your financial goals and invest a fixed amount on a monthly basis on a chosen date. Stay consistent with your SIP investments. They leverage market volatility by automatically purchasing more units at lower prices and fewer units at higher prices, so you don't need to worry about market fluctuations.

Factors to consider before starting an SIP

Here are a few factors one should consider before starting an SIP investment -

Financial Goal

Before venturing into the world of mutual fund investments, it is crucial to establish clear financial goals. These goals will help determine an investor's risk tolerance and investment horizon. Based on these factors, investors can explore various fund schemes and categories like equity, debt, balanced, and liquid funds.

Fund Performance

When selecting a SIP, it is crucial to analyze the fund's historical performance, especially over the past 5 to 10 years. This allows you to compare funds and determine their ability to handle market volatility.

Expense Ratio

The expense ratio, which is the annual fee charged by an Asset Management Company (AMC) to administer, manage, promote, and distribute a mutual fund, can significantly impact the fund's performance. A lower expense ratio indicates efficient cost management by the fund manager, making the fund more appealing to investors. However, choosing a fund based solely on a low expense ratio isn't always advisable. Investors should instead prioritize funds with a reasonable expense ratio to ensure cost-effectiveness over the long term for their SIP.

AMC Track Record

When selecting a mutual fund for a SIP, it is essential to evaluate the track record of the AMC offering the fund. This evaluation provides insights into the AMC's credibility, reliability, and investment process, serving as a crucial factor in the selection process. Investors should prioritize AMCs with a strong reputation, diverse successful funds, and a robust investment strategy.

Who should invest in SIP?

SIP is a good investment option for most investors. A lot of investors prefer the SIP mode of investing because it is simple to understand and execute. Moreover, one can start investing in SIP with as low as Rs 500 per month. It is not necessary to have a large sum of money to invest in SIP. Hence, it is affordable and convenient for all types of investors.

SIPs are ideal for:

• Investors with a steady income who can commit to regular investments.
• Beginners who prefer a more passive approach to investing.
• People who want to invest regularly without worrying about market timing.
• Investors looking to build wealth over the long term with lower risk.

Advantages of starting an early SIP

Starting an early SIP can enhance your financial future and help you accumulate wealth over a period of time.

Power of Compounding

Compounding allows the returns on your investment to generate their own returns, leading to exponential growth over time. The impact of compounding increases with a longer investment horizon, so starting an SIP early can significantly increase your returns.

Affordable Monthly Investment

Early SIPs allow you to invest smaller amounts each month while still achieving significant long-term returns. By starting early, you don't have to strain your finances with larger, one-time investments. Small, consistent contributions add up over time.

Benefit of Rupee Cost Averaging

SIPs invest a fixed amount every month, which means that during market fluctuations, you buy more units when prices are lower and fewer when they are higher. Rupee cost averaging helps reduce the overall average cost of your investments over time, improving your chances of better returns in the long run.

Tax Benefits on SIP Investment

SIP investments under Equity Linked Savings Scheme (ELSS) are eligible for tax deduction under section 80C of the Income Tax Act. This means that the amount you invest in an ELSS SIP (up to ₹1.5 lakh) will be deducted from your taxable income, reducing your overall tax liability. Also, ELSS has the shortest lock-in period of 3 years among other tax-saving options.

SIP vs Lumpsum Investment

• SIP and Lumpsum investment both have their own advantages. While SIP is a regular, small investment made at fixed intervals (e.g., monthly) over a long period, Lumpsum is a one-time, large investment made in a single go, typically when you have a significant amount of capital available.
• In terms of flexibility, SIP is more flexible as you can adjust the amount as per your preference, while lumpsum is less flexible as the entire investment is made upfront in one go.
• SIP is ideal for long-term goals, as it takes advantage of compounding over a period of time. On the other hand, lumpsum can be suitable for either short-term or long-term depending on the timing and market conditions when the investment is made.