Systematic Investment Plans are a facility offered by Mutual Fund schemes to inculcate disciplined investment of a fixed amount of money at pre-defined intervals. It is a great option for those who want to invest in frequent intervals instead of investing the whole amount at once. It is not restricted to Mutual Funds and is also useful as an investing strategy in the stock market and other schemes.
This type of investment lets you calculate SIP returns conveniently using your smartphone and the SIP returns calculator. Besides enabling you to invest in instalments, here are other features it can offer:
Safety
Mutual Funds are a great way to start an investing career. Suppose one does not know about stocks and shares, a Mutual Fund gives exposure to the Equity Market with minimal risk. Besides, the money gets invested periodically, making it convenient for the investor. It gets deducted directly from the bank. It is a safe investment because the money gets allotted in the Mutual Fund scheme that the investor decides.
Discipline
Investing in Equity Mutual Funds through SIP makes the process organised and disciplined. With the SIP in place, investing weekly, monthly, or quarterly becomes flexible, depending on the scheme. It also ensures you are not financially drained, making the investment convenient and flexible. The foundation of Mutual Funds is a systematic or organised order of using money and distributing it with interest. SIP works in a disciplined manner to comply with the investor’s convenience.
Small payments
Most investments require huge amounts to get better and higher results. However, not everyone may afford to pay huge sums all the time. Mutual Funds SIP option allows investors to invest as low as Rs. 500, which is affordable. Regularly paying small amounts builds a decent investment corpus, including the interest earned, and allows you to plan your future expenses accordingly.
Convenience
Once you select the Mutual Fund scheme, ask the bank to enable auto-debits. The monthly, weekly, or quarterly SIP gets deducted directly from the bank without manual processing. It is a great option for investors who are busy earning money. Receive the interest with the principal amount periodically in your Bank Account.
Power of compounding
Compounding is when the interest earned gets reinvested in the Mutual Fund for higher returns. You must stay invested longer to ensure higher profits in the early stages. The compounding effect magnifies the returns earned through SIP and invests for a longer term. Using the calculator to calculate SIP returns is highly beneficial for investors who want to earn more over the long term.
Stop or skip payments
You can stop SIP at any time. The investor can withdraw the amount or continue investing in the Mutual Fund. If you have no balance in the account for SIP investment for a particular month, you can continue without paying the penalty. You also own more stocks in smaller quantities at lesser prices.
