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Everyone wants to make proper savings of their money which can be safer giving them better benefits over a period. Saving through various ways are been done for many years.

There are some traditional methods of saving money that can keep their money safe and give better returns further.

Now, for the last few years, the Systematic Investment Plan [SIP] is another way for saving money. Using the SIP return calculator, you can calculate the investment you make and the returns you can expect over a period. Many people have successfully gained better benefits using SIP-saving methods.

We will look in more detail at traditional methods and SIP methods by using a monthly SIP calculator for savings.

Which is a better way to save money: Traditional Method or SIP Calculator?

Here we will look in more detail at both methods for saving money:

Traditional Saving Methods

Traditional saving methods refer to the conventional approaches individuals have used to save money over the years.

Some common traditional saving methods include:

1. Savings Account

Opening a savings account with a bank and depositing money into it. The account may earn a nominal interest rate, usually lower than inflation, resulting in limited growth.

2. Fixed Deposits (FDs)

Investing a lump sum of money in a fixed deposit account for a specified period. FDs offer higher interest rates than savings accounts, but the interest rates are often fixed, providing limited flexibility.

3. Recurring Deposits (RDs):

Making regular monthly deposits into a recurring deposit account with a bank. RDs offer a fixed interest rate but do not provide the same level of growth potential as other investment avenues.

4. Post Office Savings Schemes

Utilizing various savings schemes offered by post offices, such as Public Provident Fund (PPF), National Savings Certificates (NSC), etc. These schemes often offer fixed interest rates and longer lock-in periods.

SIP Calculator

A Systematic Investment Plan (SIP) calculator is a tool that helps investors estimate the potential returns from investing in mutual funds through a SIP. It considers various factors such as the investment amount, duration, expected rate of return, etc.

Advantages of SIP Calculator:

1. Savings Account

Opening a savings account with a bank and depositing money into it. The account may earn a nominal interest rate, usually lower than inflation, resulting in limited growth.

2. Flexibility

SIP calculators provide flexibility in choosing the investment amount and duration based on individual preferences and risk appetite.

3. Compounding Benefit

SIPs benefit from the power of compounding, as the returns generated from investments are reinvested, resulting in potential exponential growth over the long term.

4. Historical Data

The monthly SIP calculator often uses historical data to estimate the potential returns, providing a realistic outlook for investors.

5. Comparative Analysis

These calculators allow investors to compare different investment scenarios by adjusting variables such as investment amount, duration, and expected rate of return, helping them make informed decisions.

You can observe from the above factors that both provide a basic saving way. However, SIP methods give more substantial growth for savings which can increase your finances.

If you need experts to give a better plan on the SIP method for savings then outsource to a reputed agency.

Meru Accounting provides expert services using a SIP return calculator for making proper savings. They have a monthly SIP calculator to help you understand the investment you make and the relevant returns given.

Meru Accounting is a well-known accounting service-providing agency across the globe.

FAQs

  1. How does a SIP calculator improve saving clarity?
    It shows how small monthly amounts can grow using clear inputs like time, rate, and amount. It removes guesswork from planning.
  2. Why is SIP more flexible than fixed deposits?
    You can start or stop SIP anytime without losing control of your money. Fixed deposits lock your funds for set periods.
  3. What makes compounding strong in SIP growth?
    Returns earned are added back into the same plan. This boosts future returns without needing higher amounts.
  4. Does a savings account give long-term value?
    It protects money but earns low returns. Over time, inflation reduces its real worth.
  5. What do SIP calculators use to guide investors?
    They rely on past return data and current inputs. This gives better estimates for planning ahead.
  6. Why do recurring deposits fall short in returns?
    They offer fixed interest, but no market-linked growth. This limits your earning potential over time.
  7. Can SIP help you beat inflation?
    Yes. The return rate in SIP often stays above inflation, which protects and grows your money.
  8. How does comparative analysis work in SIP calculators?
    You adjust amount, time, or return rate. This shows how each change affects the final return.
SIP Calculator vs. Traditional Saving Methods: Which is Better?