An online financial tool called a Systematic Investment Plan (SIP) calculator may help you determine the returns on your SIP investments. The SIP Calculator also shows you how much you’d have to invest each month to reach your goal corpus. Simply defined, it serves as a road map for achieving various financial objectives.
Without the need of a pen and paper, the calculator may be quite useful in instantly completing difficult financial computations. You only need to enter a few numbers, and the calculator will calculate the answer in a couple of seconds.
How To Calculate SIP Investments?
For many investors, this is the major question. A mutual fund SIP calculator is the answer.
A mutual fund SIP return calculator usually includes three input boxes. They are:
- Amount of monthly investment
- Period of investment
- Annual returns expected
You must enter the monthly amount you desire to put in a fund. For example, depending on the amount you choose to invest, it might be as low as Rs. 500 or as high as Rs. 10,000 (or more).
The duration of the investment should be entered next. You must choose the length of time you wish to invest in the fund via SIP. In most cases, fund companies demand investors to commit to a SIP for at least six months.
After that, you must input the expected rate of return on the investment. The fund's prior performance is used to calculate this number.
After you've entered these numbers, click the 'calculate' button to see how much money you may make in the given time frame. You may play with the values to see what works best for your budget and goals.
Here's an illustration of how the SIP calculator works:
Assume you want to invest Rs. 4,000 every month for the next ten years. The anticipated rate of return is 10%. You must enter these figures into the appropriate fields, and the calculator will calculate the amount of money you will get.
In this situation, your total earnings will be Rs. 8.3 lakhs. You would earn Rs. 10.3 lakhs if you increase the investment amount to Rs. 5,000. This is how you may play with the values to observe how your investments perform.
The 'Adjust for Inflation' button is an extra input on certain calculators. If you don't know how much your objective will be worth in the future after inflation, you can utilize this option. You have two options: yes or no. If you choose yes, the calculator will account for the increase in inflation. If you select no, the estimates are not adjusted for inflation.
Incorporating inflation into the computations is always preferable since it provides a more accurate value for the profits. Some calculators also provide you a graphical representation of how your profits might rise over time.
What Is Systematic Investment Plan (SIP)?
A systematic investment plan (SIP) is a method of investing that is disciplined. The SIP strategy involves investing a certain amount of money in mutual funds on a monthly, quarterly, or even semi-annual basis. For example, if you decide to invest Rs. 2,000 per month in a mutual fund via SIP, you should make every effort to deposit the money into the fund on a monthly basis.
You may use the auto-debit tool to guarantee that the money is paid to the fund on the designated date immediately from your bank account. You won't have to worry about missing a monthly payment this way.
The goal of SIP investing in mutual funds is to accumulate wealth over time. It can help you develop the habit of saving and investing because it is an ongoing investment procedure rather than a one-time commitment. SIP investments can also reduce your exposure to financial market volatility.
Que. 1 What are the different types of SIP?
Ans. Top-Up SIP, Flexible SIP, Perpetual SIP
Que. 2 Why should you invest in SIP and what are the benefits?
Ans. When investors opt to invest in mutual funds online through SIPs, they gain a number of financial advantages. Here are a handful of the most important:
- Average rupee price
- Compounding's power
- Investing is simple.
- Financial planning tool of choice