Mutual funds are gaining popularity today in the market as an investment option due to its benefits of professional management, hassle free investing and power of compounding. Online mutual fund is the primary reason why more and more investors are choosing to start investing their hard-earned savings in mutual funds and let it grow. It is convenient for them as with time and patience, mutual funds can help one reach their desired financial goals. There are various methods for starting investments, which one can choose based on their convenience. One of the most popular methods, among them, is SIP Mutual fund Let us discuss further on the same.
What is SIP Mutual fund?
If you are an investor looking to invest periodically in mutual funds, such as monthly from your earnings over a time period, then SIP is the best option for you. SIP mutual fund helps investors to grow their wealth, and it works best, if they make an early start. For example, if one starts investing at the age of 25, monthly amount of Rs 15,000 for say 10 years in a good fund, the corpus can be more than Rs 34 lakhs after 10 years, assuming 12% annual returns. So, by the time the investor turns 35, he/she has a substantial corpus that can act as a cushion during exigencies or even be used for the completion of medium term/long term goals.
Hence, saving, planning and investing early can truly help. The SIP investment amount, as opposed to general myth, can be as low as Rs 500 per month.
What is Lumpsum investing?
On the other hand, another way of making a mutual fund investment – lumpsum investments - is a one-time investment in a mutual fund scheme. This amount is then allowed to grow with time to create a substantial corpus for the investor in future. If the investor chooses equity funds here, the time frame should ideally be a minimum of 5 years+, and in case of debt funds (liquid funds, overnight funds), they can invest for shorter durations from a few days to few months or in case of some funds, for few years.
In order to make lumpsum investing simpler, one can use online tools such as the mutual fund lumpsum calculator. In this tool, once you enter how much you would like to invest in a fund and the tenure, it tells you the expected amount, based on your return expectations. This helps in informed investing.
Let us understand this with a simple example -
Suppose, you invest Rs 1 lakh in a chosen mutual fund for 20 years and assume the returns to be 12% p.a., your expected corpus after 20 years would be Rs 964,630. This calculation was done in seconds using the mutual fund lumpsum calculator online. Once you know your amount to be invested, expected returns and the tenure, this tool helps you in making an informed decision.
Mutual fund investing is simple, convenient, and beneficial, it tends to yield the best results when done with patience and the right financial advice. The calculators facilitate this process and helps investors in decision making.
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