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A Systematic Investment Plan (SIP) is a disciplined method of investing in mutual funds where a fixed amount is invested at regular intervals, typically monthly or quarterly. It helps investors build wealth over time by leveraging rupee cost averaging and the power of compounding. SIPs eliminate the need to time the market, reducing risks associated with market volatility.
By investing consistently, investors buy more units when prices are low and fewer units when prices are high, averaging out the overall cost. This method is ideal for long-term goals such as retirement planning or children's education. SIPs are flexible, allowing investors to start with as little as ₹500 per month, increase contributions, or pause investments if needed.
When you invest in a SIP, a predetermined amount is deducted from your bank account and invested in a chosen mutual fund. Over time, the invested amount accumulates units of the mutual fund at different Net Asset Values (NAVs), averaging out the cost of purchase. The key advantages of SIPs include:
SIP returns can be calculated using the compound interest formula:
M = P × [(1 + r/n) ^ (nt) - 1] / (r/n) × (1 + r/n)
Where:
Following are some of the types of SIP where you can invest:
Under the Union Budget announced in February 2025, the tax rates for capital gains on mutual fund investments are specified based on the type of fund and the holding period. For equity mutual funds, if units are held for 12 months or less, the gains are considered short-term capital gains (STCG) and are taxed at 20%. If the holding period exceeds 12 months, the gains qualify as long-term capital gains (LTCG). In this case, gains up to ₹1.25 lakh in a financial year are exempt from tax, while any amount exceeding this threshold is taxed at 12.5%.
It's important to note that each Systematic Investment Plan (SIP) installment is treated as a separate investment. Therefore, the holding period and applicable tax rates are calculated individually for each installment. Additionally, the Securities Transaction Tax (STT) applies to equity mutual funds, levied at 0.001% on redemptions.
Annual Step-Up in SIP refers to the practice of automatically increasing your SIP (Systematic Investment Plan) contribution every year by a fixed percentage or a fixed amount. It is designed to match your growing income over time, allowing you to invest more without feeling a heavy burden. Step-Up SIPs help in building a significantly larger corpus compared to a fixed SIP, making it an effective strategy for long-term wealth creation.
Initial Investment in SIP is the first lump sum amount you invest at the beginning when starting a SIP (Systematic Investment Plan). While SIPs are typically about investing a fixed amount monthly, some investors choose to make an initial investment to boost their starting corpus. This initial amount gets invested immediately, and then regular SIP contributions continue every month. Making an initial investment is optional, but it can help your money start compounding earlier and grow faster over time.
The Systematic Investment Plan (SIP) Calculator available at MoneyReload is an online tool designed to help investors estimate the potential returns from their SIP investments in mutual funds. By inputting details such as the monthly investment amount, investment tenure, and expected rate of return, the calculator provides an approximation of the future value of the investments. We also support the SIP calculation based on annual step up percentage. You can calculate the returns along with an optional initial lumpsum investment.
Yes, most SIP investments can be withdrawn at any time, except for ELSS (which has a lock-in of 3 years).
If you miss an SIP installment due to insufficient funds in your bank account, the consequences depend on your bank and the mutual fund house. Generally, missing one installment does not result in the cancellation of your SIP. The fund house will attempt to deduct the amount on the scheduled date, and if unsuccessful, your bank may charge a penalty for a failed auto-debit transaction. However, your SIP continues as usual for future installments.
A Systematic Investment Plan (SIP) and a Fixed Deposit (FD) serve different purposes. FDs offer guaranteed returns with fixed interest rates, making them ideal for risk-averse investors seeking capital protection. However, returns are lower, and premature withdrawals attract penalties. SIPs, on the other hand, invest in mutual funds, offering higher long-term returns but with market risks. They provide flexibility, rupee cost averaging, and tax-efficient growth depending on the holding period. While FDs are suited for stability and predictable returns, SIPs are better for wealth creation over time. A mix of both can balance risk and returns effectively.
Yes, you can change your SIP amount later through two primary methods. The first option is the SIP modification request, where you can increase or decrease the investment amount through your mutual fund provider or investment platform. Some fund houses allow this online, while others require a physical form submission.
The second option is the Step-Up SIP feature, which lets you set an automatic periodic increase in your SIP amount to match income growth. If your fund does not support modification, you can stop the existing SIP and start a new one with the revised amount. Your previous investments remain unaffected. Always check with your fund house for specific procedures, as rules may vary.
Our SIP calculator helps you calculate SIP returns based on your monthly investment, the expected annual return, and the tenure. Simply input your investment details, and the tool will compute your total returns.
The maturity value of your SIP investment is the amount you will receive at the end of the tenure, including the capital invested and the returns generated. Our SIP calculator provides you with this estimate.
No, SIP investment is not tax-free. The returns on your SIP are subject to capital gains tax depending on the holding period. Use our income tax calculator to estimate taxes on your SIP returns.
SIP allows you to invest in mutual funds regularly, helping you average out the cost of your investment. It’s a great strategy for long-term wealth accumulation. Our SIP calculator demonstrates how your SIP grows over time.
For lump sum SIP investments, you need to input the total investment amount and expected returns into the SIP calculator. The tool will estimate the maturity value based on your lump sum contributions.
Yes, you can start SIP with as low as ₹500 per month. Our SIP calculator allows you to simulate returns on low or high SIP investments.
SIP returns are based on the mutual fund’s historical performance and expected returns, not a fixed interest rate. Use our SIP calculator to estimate potential returns based on the projected rate of return.
Yes, SIP can be stopped at any time. However, doing so may impact your long-term returns. The SIP calculator assumes that your SIP runs for the chosen tenure.
The SIP return calculation is based on the compounding effect of your monthly investments. Our SIP calculator automates this calculation to give you an accurate return estimate.
SIP returns are subject to capital gains tax. Short-term gains (less than 3 years) are taxed at 15%, and long-term gains are taxed at 10% without indexation. Use our tax calculator to determine the taxes on your SIP returns.
