What is SIP (Systematic Investment Plan)?

Systematic Investment Plan (SIP): An investment scheme provided by mutual fund companies.

Investment Methodology: Allows individuals to invest a small amount at regular intervals (weekly, monthly, quarterly) in a chosen mutual fund.

Objective: A disciplined and passive approach for retail investors to create long-term wealth, leveraging the power of compounding.

Volatility Management: Reduces the impact of market volatility since investments are made at regular intervals.

SIP Calculator Functionality:

• Wealth Gain Estimation: Calculates the potential wealth gain and expected returns for a monthly SIP investment.
• Estimation Basis: Provides a rough estimate of the maturity amount based on a projected annual return rate.
• Comparative Tool: If the investor holds Fixed Deposits (FD) in their portfolio, a fixed deposit calculator is available to approximate the maturity value.

Benefits of SIP compared to Lumpsum Investment:

1. Market Speculation Avoidance:

   Eliminates the need to speculate or time the market for generating returns over the long term.

2. Impact of Market Volatility:
   • Investments made on a monthly basis result in little to no impact from market volatility.
   • Utilizes the concept of unit cost averaging to mitigate risks associated with market fluctuations.

3. Passive and Automated Approach:
   • Passive Investment: Encourages a passive and automated investment approach.
   • Monthly Installments: Payments are deducted automatically, promoting a disciplined and committed savings/investment strategy.

4. Flexibility:
   • Investment Amount: SIPs are flexible, allowing investors to start with amounts as low as Rs. 1000 per month.
   • Easy Management: Investors have the flexibility to create, update, or cancel SIPs at any time.

Conclusion:

- SIP serves as a strategic investment tool for those seeking a disciplined, low-risk, and automated approach to wealth creation.

- The flexibility and ease of management make SIP an accessible option for a wide range of investors.

- The use of calculators enhances the investor's ability to plan and project their investment outcomes effectively.