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What is SIP(Systematic Investment Plan)?
SIP stands for Systematic Investment Plan. It's a popular method for investing in mutual funds that involves investing a fixed amount of money at regular intervals, typically monthly, quarterly, or even weekly.
Here are some key features of SIPs:
Disciplined investing: SIP encourages regular investment habits, regardless of market conditions. This helps avoid the temptation to time the market, which can be difficult to do successfully. Affordable investment: You can start with a small amount, sometimes as low as Rs. 100 per month, making it accessible to a wider range of investors.
Rupee-cost averaging: By investing at regular intervals, you purchase units at different Net Asset Values (NAVs), which helps average out the overall cost per unit. This can be beneficial over time, especially in volatile markets.
Convenience: SIPs are automated, so you don't have to worry about manually investing each time. You can set up a standing instruction with your bank to automatically debit the SIP amount.
SIPs are a great way to build wealth gradually over the long term and benefit from the power of compounding.
What is a SIP Calculator?
The Best SIP calculator is a handy tool for individuals, especially those interested in SIP investments in Mumbai, to gauge the potential returns on their mutual fund investments. SIPs, which have gained significant popularity among millennials, particularly in Mumbai, involve investing a fixed amount regularly into mutual funds.
These calculators provide potential investors with an estimate of their mutual fund investments. However, it's crucial to understand that actual returns from a mutual fund scheme can vary due to various factors. SIP calculators usually do not consider exit loads and expense ratios, which can impact returns.
By entering details such as the invested amount, investment duration, and expected annual return rate, the SIP calculator offers an approximation of wealth gain and expected returns. It's essential to remember that this estimation provides a rough idea and may not precisely reflect the actual returns received by an investor.
If you're considering SIP investments in Mumbai, consulting an SIP distributor in Mumbai can provide personalized guidance and assistance tailored to your financial goals and preferences.
How do SIP calculators work?
A SIP plan calculator works on the following formula :
M = P × ({[1 + i]^n – 1} / i) × (1 + i)
In the above formula:
M is the amount you receive upon maturity.
P is the amount you invest at regular intervals.
n is the number of payments you have made.
i is the periodic rate of interest.
Take for example you want to invest Rs. 1,000 per month for 12 months at a periodic rate of interest of 12%.
then the monthly rate of return will be 12%/12 = 1/100=0.01
Hence, M = 1,000X ({[1 +0.01 ]^{12} – 1} / 0.01) x (1 + 0.01)
which gives Rs 12,809 Rs approximately in a year.
The rate of interest on a SIP will differ as per market conditions. It may increase or decrease, which will change the estimated returns.
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