People know many ways to save money but very few understand investing. Saving is simply setting aside money for some unexpected emergencies whereas investing is putting your money in some avenues so as to make your money grow. Let us discuss in detail about SIP (Systematic Investment Plan) and the use of SIP calculator in this article.
Why should one prefer SIP? SIP is a way to invest a certain amount of money periodically in mutual funds to achieve your long term goals. Usually, most of us are lazy when it comes to investing and keep procrastinating. The earlier one starts investing, the more time one can give for his money to grow which results in higher returns.
You don’t need a huge amount; You can invest a very little amount too in SIP which makes it the most sought after investment route. When you start doing SIP, you get a sense of financial discipline and you become a regular investor that will help you in getting better returns. As we live in a highly fast paced world, it is important to allocate our portion of money regularly to fulfill our goals and also for a secured future. SIP gives the flexibility of investing any amount of money as per your wish as per your desired time interval. SIP has to be continued for a longer time to get higher returns as SIP works on the principle of power of compounding.
Before investing in SIP, one has to know his goals and the time period in which he wants to achieve those. Once you are sure about this, using SIP calculator, you can easily find out how much you should invest monthly so as to get a desired amount after certain tenure. By knowing this, you can easily invest the necessary amount periodically in a SIP. The main benefit of investing in SIP is that even when the market does not perform well, you can get more units of SIP due to rupee cost averaging. SIPs are sold as units and the price of these units i.e. NAV (Net Asset Value) keeps varying. When the market is performing well, you get to buy only fewer units of SIP but when the markets don’t perform well, you get more units as the SIP gets cheaper. SIP calculator makes investing easy as you can easily know how much to invest and also how much returns you can get. Investing in SIP helps one to achieve long term goals with proper focus and planning.