SIP Calculator

Money makes money – A well said and proven proverb for money. Investing and compounding are such magical wonders in this world which have always shown great fascination in our hearts. Wealth Creation is possible even with penny amount if given time to grow and plantify. Can you imagine that just Rs. 200 every month will be sufficient to create a sum of 14 lakhs? Yes It is quite possible, Let’s see how this magic works for you. 

First Let me tell you that where are we going to invest this small sum of amount per month. We have basically below options for growing wealth-

• Fixed Deposits (5-6% per annum)
• Government Bonds (7-8% per annum)
• Mutual Funds (8-15%, even higher returns sometimes)

First let us know what are Mutual Funds and What is SIP?

Mutual Funds:

A mutual fund is a type of financial vehicle that pools together money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities. In simpler terms, instead of an individual directly buying stocks or bonds, they invest in a mutual fund, which then manages a large portfolio of these assets on behalf of all its investors. Some of the key points about mutual funds include:

1. Diversification: Since mutual funds invest in a wide range of assets, they offer a level of diversification. This diversification can potentially reduce the risk of a significant loss due to poor performance of a single asset.

2. Professional Management: Mutual funds are managed by professionals who have experience and expertise in choosing investments. This is especially beneficial for individuals who may not have the knowledge or time to manage their portfolios.

3. Liquidity: Mutual fund shares can be sold (redeemed) on any business day, providing investors with easy access to their money.

4. Variety: There are various types of mutual funds tailored to different investment goals and risk tolerance, including equity funds, bond funds, money market funds, index funds, and balanced funds, among others.

Systematic Investment Plan (SIP):

A Systematic Investment Plan (SIP) is a method by which investors can invest a fixed amount of money at regular intervals (e.g., monthly or quarterly) into a mutual fund of their choice. Key points about SIP include:

1. Discipline: SIP encourages a disciplined approach to investing by committing the investor to save regularly.

2. Rupee Cost Averaging: By investing a fixed sum of money regularly, irrespective of market conditions, investors can average out the cost of investments. When the market is low, they acquire more units, and when the market is high, they acquire fewer units.

3. Convenience: SIPs can be automated, meaning a fixed amount can be automatically debited from an investor’s bank account and invested in the mutual fund of their choice.

4. Long-term Perspective: SIPs are generally more effective when maintained over longer durations. This approach also helps in mitigating short-term market volatility.

In essence, while a mutual fund is a financial vehicle that allows collective investment in diversified assets, SIP is a method or strategy to invest in these funds in a disciplined and regular manner.

Now If We start with Rs. 200 SIP every month i.e. about 2400 per annum, we can get good amount after some years.

Now visit  SIP Calculator  given at the top of page and Enter Rs. 200 in Monthly Investment, 15% in Interest Rate p.a and 30 years in Time Period and check the results.  Yes You are right, You will be owning a lumpsum amount of 14 Lakhs !!