New Delhi: A Systematic Investment Plan (SIP) is a disciplined and systematic approach to investing in mutual funds. SIP allows investors to invest a fixed amount of money at regular intervals—monthly or quarterly—into a mutual fund scheme. SIPs enable investors to inculcate a habit of regular savings and investments, leading to potential wealth accumulation over time. In an SIP, a predetermined amount is automatically deducted from your bank account and invested in a chosen mutual fund scheme. By investing regularly, you buy more units when prices are low and fewer units when prices are high, averaging out the purchase cost over time. The returns earned on your investments are reinvested, which generates additional returns over time. SIPs help maintain financial discipline and avoid the temptation to time the market.
Mutual Fund SIP calculator
To illustrate the potential of SIP investments, let’s consider an example. Suppose an investor decides to invest ₹15,000 monthly in a mutual fund through an SIP. The expected rate of return is 12% per annum, and the investment duration is 25 years. Over this period, the total amount invested would be ₹45 lakhs (₹15,000 x 12 months x 25 years). Due to the power of compounding, the future value of the investment would grow to approximately ₹2.82 crores.
Mutual Fund investment: Growth in SIPs
The Association of Mutual Funds in India (AMFI) has reported a steady rise in SIP inflows, reflecting growing investor interest. SIP inflows increased from ₹18,838 crore in January this year to ₹21,262 crore in June, a 12.8% rise in just six months. This growth underscores the confidence retail investors have in SIPs as a viable investment vehicle. Retail investors find SIPs appealing for several reasons. SIPs allow investors to start with small amounts, making it accessible for a wide range of income groups. Investors can choose the frequency and amount of their investments based on their financial goals and capacity. The automated process of deducting and investing a fixed amount regularly simplifies the investment process. By investing systematically over a long period, investors can accumulate a substantial corpus, benefiting from market growth and compounding returns.
Systematic Investment Plans (SIPs) offer a structured and disciplined approach to investing, enabling retail investors to build significant wealth over time. With rising SIP inflows and growing awareness of its benefits, more investors are turning to SIPs to achieve their long-term financial goals. By understanding the workings of SIPs and leveraging their advantages, investors can make informed decisions and secure their financial future.
(Disclaimer: This article is only meant to provide information. News9live.com does not recommend buying or selling shares or subscriptions of any IPO and Mutual Funds.)
Stories
Click to read in detail
New Tax Regime
How can I switch to new tax regime?
MF & Tax
Are mutual funds eligible for deduction
HRA & tax
No HRA component in salary: How to save tax
ITR due date
Can Income Tax Return be filed after due date?
Systematic Investment Plans (SIPs) offer a structured way to invest in mutual funds. Discover how a monthly SIP of Rs 15,000 can help an investor build a corpus of Rs 2.83 crores. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
