SIP Calculator

What is a Systematic Investment Plan (SIP)?

A Systematic Investment Plan, commonly known as a SIP, is a method of investing in mutual funds where an investor contributes a fixed amount of money at regular intervals (usually monthly). Instead of investing a large lump sum at one time, a SIP allows you to invest smaller amounts consistently over a long period.

SIPs are a disciplined approach to investing and are ideal for long-term goals like retirement planning, buying a house, or funding a child's education.

The Benefits of Investing via SIP

SIPs offer several key advantages that make them a popular choice for a wide range of investors:

• Rupee Cost Averaging: This is the primary benefit of a SIP. Since you invest a fixed amount regularly, you automatically buy more units when the market is low and fewer units when the market is high. This averages out your purchase cost over time and reduces the risk of timing the market.
• The Power of Compounding: Your SIP investments grow through the power of compounding. The returns you earn are reinvested, generating further returns. Over the long term, this can lead to significant wealth creation.
• Financial Discipline: By automating your monthly investments, a SIP instills a habit of regular saving and investing, which is crucial for achieving financial goals.
• Flexibility: You can start a SIP with a small amount (as low as INR. 500), and you can increase your investment amount or stop the SIP at any time.

What is a Step-Up SIP?

A Step-Up SIP (or Top-Up SIP) is a powerful feature that allows you to automatically increase your monthly investment amount at regular intervals, typically once a year. This aligns your investments with your growing income. Even a small annual increase of 5-10% can have a massive impact on your final corpus due to the combined effects of higher contributions and compounding. Our calculator allows you to model this effect to see the potential difference.

Frequently Asked Questions (FAQs)