Mutual fund investing can be customised by retail investors and pursued as per their convenience. There are two primary ways of making an investment in mutual fund schemes – SIP or lumpsum. It has always been a common question: Which is better: SIP investment plan or Lumpsum? Well, there isn’t one answer to this as for a certain set of investors, lumpsum investing might be an ideal choice, whereas for a different group, SIP might be the right path to walk on. It depends on your risk taking ability, flow of income, money available to invest, in order to choose the right mode. However, there are certain advantages to invest in SIP over lumpsum and here we shall highlight them:
Investment Discipline –
In case of SIP, the predetermined amount is deducted from the investor’s bank account, every month or at the chosen frequency, on the given date. So, the individual has to make sure that there is sufficient balance in his/her account on that date and this helps to inculcate financial discipline. Whereas in the case of a lumpsum investment, one just has to invest an amount and let the money grow.
Market timing –
Since a SIP mutual fund investment plan gets you a greater number of units when the market is down, they lower the average cost of investing. This, in turn, may bring higher returns in the long term. Therefore, SIP is least affected due to rupee cost averaging. Another added advantage is that one need not worry about the market volatility while investing through a systematic investment plan. Here, time spent in the market is more important than timing the market.
Flexibility –
With the help of SIP, an investor can customise his/her investments, in terms of the amount, tenure, frequency. Moreover, he/she can increase the SIP amount through annual top ups with the rise in their annual income. This helps to reach financial goals faster and maintain your investments in line with your income.
When we are talking about SIP mutual funds in detail, the SIP calculator cannot be far behind. Financial calculators have simplified mutual fund investments with their ease of use, and accuracy. It reduces the possibility of human errors and instils confidence in retail investors, regarding their investing decisions. There are many types of SIP return calculator available online, you can choose to use the one that you require for your SIP investments:
SIP calculator.
Top Up SIP calculator.
Goal based SIP calculator.
The basic SIP calculator.
Based on the estimates you need, you can choose which financial calculator to use. Suppose you wish to increase your SIP amount annually by 10% and find out how it would affect your corpus eventually, then, it makes sense to use the top up SIP calculator. Now, if you wish to understand what your corpus might look like after certain years of investing, then using the basic SIP calculator is the right choice. Let us see an example – Suppose, Hitesh invests Rs. 12,000 every month in a chosen SIP investment plan over a period of 10 years and expects 12% return. Then, his expected corpus would be close to Rs. 28 lakhs, against the total investment of Rs 14,40,000. The SIP return calculator helped us reach this estimated calculation in seconds.
SIP investing and to calculate SIP returns has become simple and easily accessible, due to the tools available online. Investors must take advantage of these facilities, in order to build a strong financial corpus for their future.