Systematic Investment Plans (SIPs) in India: Benefits, Regulations, and the Role of SIP Calculators

In India, Systematic Investment Plan (SIP) is a simple investment option through which any individual can invest a fixed amount monthly or quarterly in mutual fund schemes. SIP helps an investor to utilise rupee cost averaging as well as the power of compounding over a longer period of time. These instruments are the first choice of investment for both beginners and experienced investors.

You will find many SIP calculators (such as https://sipcalculator.one) to make planing of investors easy. SIP calculator is used to estimate the future value of SIP investments with the help of different parameters like investment muah, investment duration and estimated return of investment.

Government Regulations and Policies on SIPs in India

The Indian government and bodies such as the Securities and Exchange Board of India (SEBI) have set several rules for protecting both investors and the functioning of SIPs. To name a few, these rules include:

1. Investor Protection Norms: Investors have a right to know a funds’ performance, risk and other relevant details.
2. Expense Ratio Cap: SEBI-enforced ceiling on expense ratios of mutual funds, to avoid dissipation of investor returns by fund management charges.
3. KYC Compliance: know-your-customer (KYC) compliance is followed by mutual-fund investors. For example, if you want to buy mutual funds, you have to submit KYC details to the fund house before investing. This helps to stay away from fraudsters and ensures that investors are legitimate.
4. Investor Education and Protection Fund (IEPF) : To promote investor education and awareness on mutual funds and SIPs.

Features and Benefits of SIP Calculators

SIP calculators offer several features that make them an essential tool for investors:

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1. Estimation of Future Value: Enter a monthly investment amount, the investment period and anticipated rate of return to estimate the future value.
2. Comparing Two Plans: Investors can compare two plans of SIP and mutual funds to decide the most suitable plan for their financial goals.
3. Goal-Based Planning: SIP calculators allow you to specify the goals you want to accomplish, such as getting a house or paying for your education; the calculator then suggests how much you need to invest each month in order to reach those goals.
4. Easy to use: Most SIP calculators have a very simple, user-friendly interface that can be understood by even those with limited knowledge on finances.
   Visualisation Tools: Some SIP calculators graphically illustrate the growth rate of investments, thereby enabling the investor to visualise her money grow over the period under consideration.

Evaluating SIP Calculators: Key Criteria

When choosing a SIP calculator, it’s essential to consider the following criteria:

1. Accuracy: The calculator should provide accurate estimates based on the inputs provided.
2. Flexibility: it must let users vary many parameters, such as investment amount, duration and rate of return.
3. Usability: The stronger the calculator, the more user-friendly and accessible it should be to every investor.
4. Related Functionalities: Some calculators provide additional functionalities such a goal-based planning, comparison between different schemes, tax saved by investing in specific funds.

SIP Calculator vs. Other Financial Calculators

Although SIP calculators are designed for calculating the expected future value of a SIP investment at the end of selected tenure, there are several other types of financial calculators available which are used for other purposes.

Below is a comparison of SIP calculators with the other popular financial calculators:

1 Lump sum investment calculator: this calculator calculates how a lump sum deposit would grow over time. It is different from SIP calculators as it doesn’t include periodic investments.

2. Retirement Calculator: Calculate how much is required to live comfortably after retirement
3. EMI Calculator for Loans: This calculator is used to calculate the monthly installment for a loan taken out by a person, where the loan amount, the interest rate on the loan and the tenure of the loan are specified.
4. Recurring Deposit (RD) Calculator: Similar to SIP calculators, RD calculators estimate the future value of periodic deposits under a recurring deposit scheme.

Popular SIP Calculators in India

There are a few SIP calculators by several financial institutions and investment platforms. Here are few:

1. On the websites of mutual fund houses: The websites of financial giants such as HDFC, ICICI Prudential, and SBI usually contain SIP calculators.
2. Investment Platforms: Most investment platforms such as Groww, Zerodha, ET Money have SIP calculators including other investments tools.
3. Websites of Banks: Some banks like State Bank of India and HDFC Bank have SIP calculators for their customers who are planning to invest.