SIP Calculator

Using an SIP calculator offers several advantages to investors. By providing a tool to estimate potential returns and plan investments more effectively, investors can make informed decisions tailored to their financial goals and risk tolerance.
Let's look at the specific benefits of utilizing a mutual fund SIP return calculator.

• Helps in decision-making: Investment planning is essential for achieving your financial objectives. You may carefully manage your finances and decide the amount to invest to meet your financial goals without any hassle by using an SIP return calculator.

• Instant output: Calculating your investment's returns manually might be time-consuming. You may quickly and easily determine the expected future value of your investment with the use of an SIP return calculator.

• Easy to use: The mutual fund SIP Calculator is incredibly simple to use. To get an estimate of the returns, you simply need to enter a few criteria, such as your investment amount, estimated rate of return, and investment horizon.

SIP vs. lumpsum investment

Many investors wonder how SIP differs from a lumpsum investment, and which of the two is more suitable. SIPs allow you to spread your investments over time and put in money into a mutual fund scheme in instalments. Lumpsum, meanwhile, is a one-time investment which typically involves a larger upfront payment. SIPs can reduce the impact of market volatility through rupee cost averaging. In contrast, the market timing risk is higher in lumpsum investing, because the entire capital gets market exposure at one go. However, this can also increase return potential in favourable market conditions.

So, the choice between lumpsum and SIP depends upon investing capacity, market conditions, risk appetite, and financial goals.

How to start SIP investment with Bajaj Finserv AMC?

Starting an SIP with Bajaj Finserv AMC can be a wise decision for those looking to grow their wealth steadily over time. Here's a breakdown of the simple steps to get started:

Step 1: Define your goal.

Begin by setting a clear investment goal. This helps in aligning your investment strategy with your financial objectives and risk tolerance. Whether it's saving for a house, retirement, or education, having a defined goal will keep you focused on the long-term benefits of your investment.

Step 2: Choose a mutual fund scheme

Once you've established your investment goal, research and analyze various mutual fund schemes. Consider factors such as investment objectives, expense ratios, and risk levels. Seek advice from financial experts or advisors if needed to select the scheme that best suits your investment goals.

Step 3: Complete KYC

Before investing in any mutual fund scheme, it's mandatory to complete the Know Your Customer (KYC) verification process as per regulatory guidelines. This involves submitting necessary documents such as identity proof, address proof, and photographs to verify your identity and address.

Step 4: Fill application:

Once KYC is completed, fill out the SIP application form. The form typically requires personal information, bank details, investment amount, frequency of investment, and duration of the SIP. You can choose to fill in the form online or offline, as per your convenience.

Step 5: Set Up SIP

After filling out the application form, set up the SIP by authorizing the bank to debit the specified amount from your bank account at regular intervals. This can be done through net banking or by providing standing instructions to your bank. Ensure that you have sufficient funds available in your bank account on the SIP debit date to avoid any interruptions in your investment plan.

Mistakes to avoid in Systematic Investment Plan

Investing in a Systematic Investment Plan can be a smart move towards financial stability. However, like any investment strategy, there are potential mistakes to avoid in order to optimize returns and minimize risks.

1. Being inconsistent: In an SIP, consistency is key. One common mistake is irregularity in contributions. Skipping or delaying payments impacts the compounding effect, reducing potential gains. Another mistake is investing without a clear goal. Without defined objectives, it's easy to lose focus and make impulsive decisions.

2. Wrong scheme selection: Overlooking scheme selection is risky. Not all schemes suit every investor's risk tolerance and financial goals. Researching and selecting schemes aligned with one's objectives is crucial.

3. Overlooking expense ratio: Many investors underestimate the impact of fees. High expense ratios and hidden charges can eat into returns significantly over time.

4. Being impulsive: Another mistake is reacting impulsively to market fluctuations. Emotional decisions often lead to buying high and selling low, which contradicts the essence of SIP - investing regularly regardless of market conditions.

Avoiding these mistakes requires discipline, patience, and vigilance. By staying committed to a well-thought-out SIP strategy and being mindful of these potential errors, investors can increase their chances of achieving their financial goals. Using an SIP calculator online can help you plan your investments and visualise the long-term growth potential of small and steady contributions.

Tax implications on SIP investment

While the SIP investment itself is not taxable, capital gains on all investments – whether SIP or lumpsum – are subject to tax. Capital gains are the profit, if any, made on an investment. In other words, it is the difference between the purchase price and sale price of a mutual fund units. The capital gains rates are as follows:

1. Equity-oriented mutual funds: Units held for more than one year qualify for long-term capital gains tax (LTCG). LTCG of up to Rs. 1.25 lakh in a financial year is tax-exempt. Thereon, a tax rate of 12.5% is levied. Units held for less than one year qualify for short-term capital gains (STCG) tax. The STCG rate is 20% and there are no exemptions.

2. Debt-oriented mutual funds: Gains are added to the investor’s annual income and taxed as per their income tax slab, regardless of the holding period. All gains are deemed to be STCG.

Additionally, each SIP instalment is treated as separate investments for tax calculation purposes, meaning each instalment follows its own holding period. The first in, first out system in followed – the units that were purchased first are redeemed first.

Lastly, investments made through SIP in ELSS (Equity Linked Savings Scheme) funds are eligible for tax deduction under Section 80C of the old regime of the Income Tax Act, 1961. Investments of up to 1.5 lakh in a financial year in ELSS and other schemes under this Section can be deduced from the investor’s taxable income, helping save on taxes.