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If we consider our investments to be similar to a pie, we can assign each piece to different kinds of investing – such as fixed deposits, gold, bonds, PPF, mutual funds, stocks and more. But, the choice of the assets depends on the risk appetite as well as financial goals of the investor.
One can choose and invest separate amounts in various assets as well, in order to have a balanced portfolio. If we concentrate specifically on mutual funds, SIP mutual fund happens to be one of the most popular ways of investing in mutual fund schemes. SIP or a systematic investment plan is the easiest way to invest small amounts into mutual funds and get the maximum benefit out of them in the long run. It is similar to putting aside money in a piggy bank or keeping the surplus aside, for future emergency situations.
In our busy lives, we tend to put savings on the back burner, choosing wasteful expenses such as luxury goods and social entertainment, etc. This is where a SIP mutual fund can come in and quietly work in the background to help us with financial discipline. Thus, we know how much to keep aside monthly from salary, allowance or income for investing purposes and at the same time, starts building something to fulfil goals or financial exigencies.
Systematic mutual fund investment is the easiest and simplest way of investing in any category of mutual fund schemes. It helps you –
- Avoid the risk of timing the markets.
- Facilitates wealth creation in a disciplined manner.
- It averages the cost of investments, so you don’t have the hassle of monitoring the markets.
- As a result of compounding over time, small savings help create a big corpus.
- Helps achieve personal investment goals.
In order to have a deeper understanding and to make the process easier, a tool such as the SIP return calculator, plays a vital role. It works on the inputs given by the user such as the investment amount, period of SIP, assumed rate of interest. Once these are given as input, it helps in knowing the estimated corpus value which would help make informed decisions.
The SIP calculator works on the future corpus amount approach as well as the target amount approach. The former approach is frequently used. Here you can input the SIP amount, assumed returns, tenure and the top-up amount. On the other hand, the target amount approach uses the goal target amount you want to achieve during the investment tenure, assumed returns to know the monthly SIP amount. If you use the top up option, it will show the SIP amount to be invested considering the annual top up amount. Depending upon what you want, the SIP calculator can help you on the path of mutual fund investment.
You must note that the SIP calculator only gives you an estimate based on the inputs provided. It does not guarantee any returns as mutual funds are based on market returns, which can only be estimated. The return from any mutual fund depends on the performance of the fund selected. Also, the actual return from can be higher or lower than the estimate provided by the SIP Calculator.
SIP mutual fund is growing in popularity, especially among the salaried individuals as it provides investors ease and convenience of investing. You can invest in SIP with a fresh perspective in the coming new year in order to slowly but surely achieve your financial goals.