Why Try a SIP Calculator Online Before Starting a SIP

An SIP or systematic investment plan is an enabler for investors to invest their monthly savings in a regular manner in mutual fund schemes, which in turn invest in the markets. It helps to build wealth over the long term, say 5 years or more, with discipline, the benefits of power of compounding, rupee cost averaging and sound financial advice.

How to Choose the Best SIP?

Choosing the right mutual fund scheme for starting your SIP is critical and it determines the smoothness of your investment journey, hence, you need to note the following points before starting:

1.   Investment Objective: It is imperative to know what you are investing for, short term or long term, what is your risk profile? These help in determining which type of fund will suit you as an investor.

2.      Fund type: As mutual funds are of various types, it is important to know which is suitable for your risk appetite. Let’s have a look at them:

-      Equity Mutual Funds:These are the most preferred choice for doing long term SIP. They are further categorised into small cap funds, large cap funds, mid cap funds, large & mid-cap funds, thematic/sector funds, etc. Equity funds are ideal if your risk profile is high to very high.

-        Debt Funds – Debt funds can be further classified based on the investment tenure. You can invest in debt funds even for one day. However for SIP, Banking and PSU funds, Credit risk funds, Short term funds, Corporate Bond funds and long term debt funds can be ideal. Depending upon how long you want to continue your SIP, you should choose an appropriate debt fund.

-      Hybrid Funds – These funds invests in both, equity and debt. While the equity portion, though uncertain, gives you higher returns, the debt portion provides stability to your portfolio.

-         ELSS Funds – SIP in tax savings funds or ELSS funds can be considered if you plan to save taxes, while building long term wealth, using the Income Tax Section 80C route. Tax saving funds are essentially diversified equity mutual funds and can be suitable if you can take high risk.          

In order to facilitate the process of SIP investment, investor should use SIP calculator online. This online tool provides you the advantage of planning your SIP investments without going through the hassle of manual calculation. It is fast, easy, can be accessed online and used as per convenience. It also gives confidence to new or potential mutual fund investors as they get more clarity on how much to start investing with. There are two types of SIP calculators - SIP calculator online helps you know the future value of your SIP at an assumed return rate and no. of years while the goal based SIP calculator helps you plan your goal. It tells you the SIP amount based on your future goal value, expected return and time period. The former helps to understand the expected corpus from SIP investment after a tenure and the latter helps to plan how to reach a certain goal through periodic sip investments.

We discussed the important points to know about SIP investing before setting foot in the space in order to gain the best results. Additionally, we touched upon the benefits of a SIP calculator online that helps to smoothen the SIP ride for investors.