A Systematic Investment Plan (SIP) calculator is an online tool that calculates the return on your SIP investment based on an estimated rate of return and the future value of your investment after a certain number of years.
The manual computation can be slightly labor-intensive since SIPs typically involve a monthly payment.
Since the holding period for each monthly contribution would be different at any given point in time, the returns for each of these payments will differ as well.
SIP works by investing a fixed amount of money at regular intervals in a mutual fund. The investor chooses the amount and the frequency of investments. The amount invested is deducted automatically from the investor’s bank account and invested in the chosen mutual fund.
In the case of mutual fund SIP, the investor receives units of the mutual fund based on the prevailing Net Asset Value (NAV) of the fund on the day of investment.
Over time, the investor builds a portfolio of mutual fund units that appreciate or depreciate in value based on the performance of the mutual fund.
SIP offers several benefits to investors, including:
First of all, Lumpsum investment means investing a huge capital at once rather than several payments of smaller amounts.
Like any investment, SIP also carries risks, including:
SIP is a popular investment tool that offers several benefits to investors, including disciplined investing, long-term wealth creation, cost averaging, flexibility, and diversification. However, SIP also carries risks, including market risk, liquidity risk, and credit risk. Investors should carefully evaluate their investment objectives, risk tolerance, and investment horizon before investing in SIP.
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