Question 1

What is a SIP?

Accepted Answer

A Systematic Investment Plan (SIP) is an investment option wherein a pre-determined amount is invested in your preferred mutual fund scheme every month (or as per chosen frequency). SIP is ideal for retail investors as its pocket friendly (SIPs start at ₹100), aids in rupee cost averaging, and eliminates the need or hassle to time the stock market. With m.Stock, you also earn 1% extra returns via direct plans, starting SIP with m.Stock makes better financial sense.

Question 2

What are the different types of SIPs?

Accepted Answer

Some of the many types of SIPs include regular SIP, flexible SIP, perpetual SIP, step-up SIP, and trigger SIP.

Question 3

What assets can I invest in via an SIP?

Accepted Answer

Generally, mutual funds are the most preferred asset class to invest via an SIP. However, you can use an SIP to invest in individual stocks as well.

Question 4

What is the maximum tenure of an SIP?

Accepted Answer

With an SIP, there’s no maximum limit to the tenure that you can opt for. You can choose to invest for as long as you need to.

Question 5

What are the fees charged for using an SIP calculator online?

Accepted Answer

You don’t have to pay any fees or charges for using an SIP return calculator online. In fact, it is completely free for use.

Question 6

How much can I invest via an SIP?

Accepted Answer

Most Systematic Investment Plans allow you to invest amounts as small as &#8377;500 each month. There’s no maximum limit to the amount of investment that you can make in an SIP.

Question 7

How to extend SIP duration?

Accepted Answer

You cannot change the tenure of your existing ongoing SIPs. However, you start a new SIP with a perpetual end date. This means that unless you explicitly ask the fund house to stop the SIP, your SIP will run perpetually.

Question 8

Are SIPs similar to mutual funds?

Accepted Answer

No. A Systematic Investment Plan is simply a style of investment, whereas mutual funds are financial products that you can invest in.

Question 9

Are mutual funds SIP investment tax-free?

Accepted Answer

Mutual funds SIP investments are not entirely tax-free. Equity-linked saving schemes (ELSS) offer tax benefits under Section 80C of the Income Tax Act, with a lock-in period of three years. Other mutual funds, like debt or equity funds, are subject to short-term or long-term capital gains tax depending on the holding period.

Question 10

Is SIP suitable for all investors?

Accepted Answer

Yes, while SIP is suitable for all investors, it is ideal for retail investors who do not have the expertise or capital to time the market. With minimum investment starting from ₹100, SIPs help salaried or individuals with low investible surplus to invest for their financial goals. It also creates investment discipline, savings habit, and helps in rupee-cost averaging.

Question 11

Is SIP only allowed in equity mutual funds?

Accepted Answer

No, you can start SIP in equity, debt and even money market funds. However, since equity markets are highly volatile and dynamic, investing in equity funds via SIP makes sense since you enjoy higher rupee cost averaging and power of compounding. Due to their limited movement, lumpsum investment is usually preferred in debt and money market funds.

Question 12

Can I renew a SIP investment?

Accepted Answer

Yes, you can renew a mutual funds SIP investment once the initial tenure ends. Many SIPs offer an auto-renewal option, or you can manually extend them. You may also modify the investment amount or switch to a different SIP plan based on your financial goals.

Question 13

Can I pause my investments in a SIP?

Accepted Answer

Technically, yes, you can pause SIPs by submitting an application to the fund house. However, this isn’t recommended as it hampers with your long-term wealth creation.

Question 14

Can I stop my SIP investment?

Accepted Answer

Yes, you can stop your SIP investment at any time by submitting a cancellation request to your mutual fund provider or through your online investment platform. However, if investing in ELSS, you must wait until the three-year lock-in period ends to withdraw your funds.

Question 15

Can I modify my SIP amount?

Accepted Answer

You cannot modify the SIP amount in all plans. Only some kinds of SIPs, like flexible SIPs and step-up SIPs, allow you to modify or increase your investment amount respectively.

Question 16

Can I withdraw from my mutual fund SIP?

Accepted Answer

Yes, you can withdraw from your accumulated mutual fund corpus. But you must ensure two things:

Withdraw only those units that have completed the lock-in period
      Ensure to check for long term and short term taxation

Question 17

Can I have multiple SIPs at one time?

Accepted Answer

Starting a systematic investment plan with m.Stock is super easy and can be done in less than 5 minutes. Follow the below steps to register SIP with m.Stock:

Login to https://trade.mstock.com
      Click on ‘Start an SIP’
      Search for a scheme. You can choose from Equity , Debt , Hybrid and ELSS
      Click on the scheme name and then click on the SIP button
      Input SIP amount, start date, and set up Autopay
      That’s it! Your SIP will be registered on successful setup of Autopay facility.

Question 18

Can I estimate my SIP corpus online?

Accepted Answer

You can use m.Stock’s SIP calculator to calculate the future value of your SIPs. This will give you the long-term picture and help you make adjustments to your SIP amount in case of a shortfall. To estimate your SIP corpus, follow the below steps:

Visit https://www.mstock.com/sip-calculator
      Select investment type as SIP
      Enter monthly investment, expected returns and time period
      The future value of your SIPs will be displayed on the screen.
      You can then start investing in your favourite scheme and earn 1% extra with Direct plans on m.Stock.

Question 19

What is the importance of the expected rate of return in an SIP return calculator?

Accepted Answer

The expected rate of return is crucial in an SIP return calculator as it determines the potential growth of your investments over time. This rate, usually expressed as a percentage, reflects the anticipated annual return on your investments. It helps in estimating the future value of your SIPs by projecting how much your periodic investments could grow based on historical performance and market expectations. An accurate expected rate of return provides a realistic forecast, aiding in better financial planning and goal setting.

Question 20

What benefits does an SIP return calculator offer to investors?

Accepted Answer

An SIP return calculator offers several benefits to investors. It simplifies investment planning by providing clear projections of potential returns based on regular, periodic investments. This tool helps you understand how your money can grow over time, making it easier to set and achieve financial goals. It also allows you to try out different investment amounts, durations, and expected returns to see how changes affect your outcomes. Ultimately, it helps in making informed investment decisions and encourages disciplined investing habits.

Question 21

How do I use a SIP Plan calculator for investment planning?

Accepted Answer

A SIP plan calculator helps you estimate the future value of your investments by considering factors like monthly contribution, tenure, and expected returns. Using an SIP return calculator, you can determine the amount needed to achieve financial goals such as retirement, buying a home, or funding your child's education.

Question 22

How to use m.Stock SIP calculator?

Accepted Answer

The m.Stock SIP calculator is designed to make investment planning easy and efficient. Follow these steps to use it:

Access the Calculator: Visit the m.Stock website or app and navigate to the SIP calculator section.
Input Monthly Investment Amount: Select Enter the amount you plan to invest every month through SIP. For example, ₹ 5,000.
Enter the Expected Rate of Return: Fill in the annualised expected rate of return based on the mutual fund’s historical performance. A typical range could be 10% to 15% for equity funds.
Select the Investment Tenure: Specify the number of years you plan to continue the SIP. Longer durations generally yield higher returns due to compounding.
View Results:The calculator instantly displays the total invested amount, estimated returns, and maturity value at the end of the selected tenure.
Adjust Parameters:Experiment with different values for monthly investment, return rate, or tenure to see how they affect your maturity value.
Using SIP calculator simplifies decision-making, giving you a clear picture of how your investments can grow over time. It’s a great way to plan and achieve your financial goals effectively. You can also use the calculator to estimate your returns for lump sum investments over a fixed tenure.

Question 23

How Can a SIP Return Calculator Help You?

Accepted Answer

A Systematic Investment Plan (SIP) return calculator is a useful financial tool that simplifies the process of estimating the potential returns on your SIP investments. Here's how it can help:

Estimate Future Returns: The calculator provides an estimate of the maturity value of your SIP investments based on your investment amount, frequency, duration, and expected rate of return. This helps in planning your financial goals effectively.
Saves Time and Effort: Instead of manually calculating returns using complex formulas, the calculator provides instant and accurate results, saving you time and effort.
Helps Compare SIP Options: By entering different investment amounts, tenures, or return rates, you can easily compare various SIP options and choose the one that aligns best with your financial objectives.
Better Financial Planning: The tool gives clarity on how much you need to invest monthly to reach a specific financial goal, such as buying a house, funding education, or retirement planning.
Encourages Discipline: Seeing the long-term benefits of small, regular investments can motivate you to maintain a disciplined approach to investing.

Using an SIP return calculator empowers you with insights to make informed decisions, ensuring your investments align with your long-term financial aspirations.

Question 24

How Are SIP Investment Returns Calculated?

Accepted Answer

SIP investment returns are calculated using the compound interest formula, which takes into account the regular investments made over time. Here’s how the calculation typically works:

Formula Used:The future value of an SIP is calculated using the formula: FV = P x ((1+r)n − 1) / r x (1+r) Where:
FV= Future Value
P= Monthly Investment
r= Rate of Return (per month)
n= Total Number of SIPs
Input Parameters:The monthly investment amount, the expected annual rate of return (converted to monthly), and the investment tenure in months are used.
Example Calculation: If you invest ₹ 5,000 monthly for 10 years at an annual return rate of 12%, the SIP calculator computes the final amount as approximately ₹ 11,61,695, out of which ₹ 6,00,000 is your total investment, and ₹ 5,61,695 is the earned return.
Compounding Effect: The calculation reflects the power of compounding, where your returns generate additional returns, leading to exponential growth over time.

Understanding how SIP returns are calculated helps you plan your finances and set realistic expectations for your investments.

Question 25

What is a Step-Up Systematic Investment Plan (SIP)?

Accepted Answer

A Step-Up SIP allows investors to gradually increase their SIP contribution at regular intervals. This helps in aligning investments with income growth, maximizing wealth accumulation over time. Unlike a fixed SIP, a Step-Up SIP lets you start small and systematically increase investments to achieve financial goals faster.

Question 26

How Does Rupee Cost Averaging Work in Investments?

Accepted Answer

Rupee cost averaging is an investment strategy where you invest a fixed amount regularly, irrespective of market conditions. When prices are low, you buy more units, and when prices are high, you buy fewer units. This averaging effect reduces the impact of market volatility and helps in long-term wealth creation.

Question 27

How Can a Mutual Fund Calculator Help You Plan Your SIP Investments Effectively?

Accepted Answer

A mutual fund calculator allows you to project the potential future value of your SIP investment by factoring in key parameters like investment amount, tenure, and expected returns. By using an SIP return calculator, you can compare different scenarios, adjust your contributions, and choose the best SIP plan to invest in based on your financial goals.

Question 28

How Does a Mutual Funds SIP Investment Work?

Accepted Answer

A mutual funds SIP investment allows you to invest in SIP by contributing a fixed amount periodically, usually monthly. This ensures disciplined investing and benefits from rupee cost averaging. Over time, your investments grow through the power of compounding, making SIPs an effective way to create long-term wealth.

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Systematic Investment Plan (SIP) Calculator

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FAQs

What is a SIP?

What are the different types of SIPs?

What assets can I invest in via an SIP?

What is the maximum tenure of an SIP?

What are the fees charged for using an SIP calculator online?