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Yearly Investment Breakdown
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What is a SIP?
A Systematic Investment Plan (SIP) is a method of investing in mutual funds where an investor contributes a fixed amount of money at regular intervals (usually monthly). It’s a disciplined approach that helps cultivate a habit of saving and investing. A key benefit of SIPs is “Rupee Cost Averaging,” which means you buy more units when the market is low and fewer units when it’s high, potentially lowering your average cost per unit over time. You can also make a one-time Lumpsum investment to kick-start your portfolio.
How to Invest in a SIP?
- Complete Your KYC: The first step is to be KYC (Know Your Customer) compliant. This is a one-time process required by regulators.
- Choose a Mutual Fund: Research and select a mutual fund that aligns with your financial goals and risk appetite (e.g., equity, debt, or hybrid funds).
- Decide on the Amount and Date: Determine the amount you wish to invest each month and pick a convenient date for the automatic debit.
- Set Up the Mandate: Link your bank account through an online mandate or physical form to allow the fund house to debit the SIP amount automatically each month.
Frequently Asked Questions
No. Investments in market-linked instruments like mutual funds are subject to market risks. The “Expected Return Rate” is an estimate for calculation purposes and is not a guarantee of future performance. Actual returns can be higher or lower.
Both have advantages. A SIP is excellent for disciplined, long-term investing as it averages out your purchase cost over time. A Lumpsum investment can potentially generate higher returns if the market performs well right after you invest. Many investors use a combination of both, which this calculator allows you to model.