Investing some part of your salary each month is one of the most effortless ways to create your financial empire. However, in the current era, everyone is increasingly dependent on credit which is not generally a wise decision. If you are salaried, the top trending investment option is SIP (Systematic Investment Plan), where a regular amount of money is invested in the preferred Mutual Fund scheme. 

Around six months ago, I planned to go with SIP when I got my first job. This is because the SIP interest rate is quite attractive for a desirable return. 

What is SIP?

A systematic Investment Plan or SIP is an investment scheme where an individual invests regular fixed amounts in a preferred Mutual Fund scheme. In this scheme, a fixed amount is deducted each month from your savings. Moreover, as the term indicates, it is a systematic method of investing fixed amounts periodically which can be monthly, quarterly or semi-annually. 

(Pro Tip: Always use a SIP Interest Calculator to calculate your potential SIP earnings) 

How does SIP work?

Believe me, you don’t have to dive deep into the details to wonder how SIPs work, as you only need to invest a fixed sum of money at regular intervals to generate good returns in the future. But, still, for a better understanding of this scheme, it is better to know that it is generally managed by a team of experts known as fund managers. Now, these are the professionals who have the required knowledge of the market, following which they invest in different areas after analysing. 

Remember, in a SIP, the units of mutual funds are purchased at predetermined intervals based on their Net Asset Value (NAV). Further, these units keep on accumulating till the tenure ends and once you redeem them, the value of the units is credited to your account.  

What are the benefits of a SIP?

• Higher Returns

Unlike fixed or recurring deposits, it provides double the returns as the SIP interest rate is quite attractive. Further, it also helps in beating the inflated costs. 

• Emergency fund

SIP is an open-ended fund without a fixed tenure, so that you can withdraw it as a contingent fund. This acts as a saviour during emergency times. 

• Flexible

With SIP, one can start investing small amounts, as small as Rs 500 each month and watch it grow over time. Moreover, it is simple and convenient to track and makes you save more. 

How to calculate your potential SIP earnings?

One of the most advisable tools to use to calculate your potential SIP earnings is a SIP Interest Calculator. So, it is an easy tool that allows you to get an idea of the returns on your investments made through SIP. It calculates the wealth gain and expected returns for your monthly SIP investment. Therefore, you get a rough estimate of the maturity amount based on a projected annual return rate.

Now, personally speaking, I use the Bajaj Finserv app on my smartphone, which offers various calculators, including this one. Of course, there are other applications, too, but this one works very efficiently, so it is highly recommended.