Benefits of Investing through SIP (Systematic Investment Plans)

Investors, across the world all have one thing in common and that is wealth creation. There is a constant desire to reap profits from one’s saved investments. There are plenty of lucrative financial instruments where investors may have their funds deposited. Some of the various options include debentures, bonds, commodities, mutual funds, real estate and stocks. However, the rate of return is unpredictable for these instruments and there is a constant variation in the amount of risks that are involved in the same.

While there are many investment instruments that are available in the market, SystematicInvestment Plans (SIPs) remain one of the most critical components to one’s investment/financial portfolio. These vehicles, which are offered by mutual funds, refer to those investments which help investors inculcate a habit of regular saving. It inculcates discipline in investors, where SIPs help to negotiate volatility in the long run.

 Similar to a recurring deposit that is held with a bank/post-office, an investor has to allocate a certain (fixed) amount of money, every month in the plan. While the minimum amount can be as low as INR 100, this amount can be changed as per the investor’s preference. The frequency, with which the deposits are made, is either on a monthly or quarterly basis.    

So, many investors may often wonder, what the actual benefits of having their funds invested in this financial instrument over any other instrument. They are especially known for the fact that the rate of return on the funds that you invest in the stock market beat the rate of inflation. This means, that there is ‘real-value’ accretion that occurs over a long-term basis. So, isn’t this exactly what investors are constantly seeking?

It is easy to invest in SIP plans online, where investors can also make use of online tools which help to facilitate the process. One of the most ideal online tools (calculators) that can be made use of is the SIP calculator. The online calculators are freely available online via different financial websites or trading portals. All that is required from the investor’s end is to enter in certain key details in the online calculator.

Some of the details include the name of the mutual fund, the scheme; the investment amount (INR), the frequency (monthly/quarterly) and the commencement date and ending date of the plan. By clicking on the ‘calculate’ button on the page, it is only a matter of a few minutes when the SIP calculator gives you a clear plan of an investor’s investment goals so as to ensure maximum benefits.     

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Investors Panicking While Markets Take a Beating On Foreign Cues

The recent beating that the Sensex has taken in the last couple of days has sent a shrill down the spine of many small time investors. For ordinary folks, market is depicted by Sensex, in such scheme of things an ordinary investor is plunged deep in to a dilemma whether to continue with his SIP investments or severe it till the market recovers.

If one goes by the recent cues of the international market, the outlook does not seem to be too bright. The downgrade of the US economy, the Euro’s economic woes and the stagnancy of Japan does not give much hope to investors around the world. Precisely due to this many FII investments would be pulled back to their respective countries either for job creation or forced by the law of the land.

So what does all this mean to an ordinary investor who has invested in a SIP? A person who has opted for a compulsory SIP would have less than a choice then to keep investing, but what about those investors who invest at will. Should they withhold their investment just because the markets shed a few hundred points in quick succession and that too because of an event in a foreign country? The answer is a flat no. An economy may see a couple of quarters in the negative but if the investments are sucked out of the economy the chances of other quarters being pulled southwards increases exponentially.

So, for people who are panicking by this sudden downfall of the Sensex, should try to reduce their hysteria and keep holding their ground. As a correction in the market is bound to happen and the lessons learned in 2008 should not be forgotten.

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SIP Calculator - Get Calculations Quicker

Have you ever wondered how to minimize the effects of an extremely volatile market? How to reap benefits from your investments despite the yo-yoing of almost every fund that is available in the stock market? Have you often wondered you can manage your personal finances without wasting too much time?

Financial calculators, mutual fund calculators and tools that are available online can help you save time and lead to quicker calculations. Some of these calculators include: loan calculators, life insurance calculator, tax information calculator, financial planning calculator, net worth calculator, EMI calculator, SIP calculator, mortgage calculator, inflation planning calculator, etc. The calculators help to ensure that you get good profits from your investments.

Click here to read entire post about SIP Calculator:

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SIP or VIP?

We all know the answer to the following very simple question buts let's start with the basics anyway, to get a better comparison between an SIP and a VIP:

What is an SIP?

An SIP, or a Systematic Investment Plan, is a mode of investment whereby you, the investor, invest a pre determined amount on a monthly basis, on a pre determined date, into a particular mutual fund scheme. It's the most commonly chosen method of investing by retail investors today.

An SIP has a number of benefits, such as:

• Benefit of Rupee Cost Averaging
  Since you're buying every month, you'll be buying at dips and rises, so you are averaging your cost over the time period.
• Benefit of Power of Compounding
  An SIP of Rs. 5,000 per month, with the help of the power of compounding, can grow to Rs. 13.76 lakhs assuming a growth rate of 15% p.a.
• Helps you avoid panic selling
  SIP investors tend to scare less easily than lump sum investors when the markets fall – as they get the chance to buy low, and later when they want, sell high.

So what is a VIP? A Value averaging Investment Plan (VIP) is an investment strategy that works like an SIP – you invest on a pre determined date, into a fixed mutual fund scheme, achieving the purpose of disciplined investing and following the finance gurus when they say 'Buy Low'. But while in an SIP the amount is fixed and units may change, in a VIP you have a target value of your portfolio, which increases by say Rs. x,000 per month, and you invest the difference between the current value of your portfolio, and the targeted portfolio investment value.

Calculate return on your investment: SIP Calculator

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