How a SIP calculator helps plan your SIP investments

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SIP mutual fund

People must know that our dreams are not fulfilled overnight, they require planning, patience, the right advice and smart decision making since one needs to convert their hard earned money to investments for future growth. It is recommended to take the leap to achieve whatever you aspire to achieve.

Here, we will explore a way to do just that. SIP or SIP mutual fund is a way to automate your savings into investments for achieving future financial goals. It is a convenient and user friendly way of investing in mutual funds, which can be started with as little as Rs. 500 monthly. This entails that all types of investors – be it students, working people, freelancers, businessmen – can avail this method of investing, in order to head towards their goals or just to build a strong financial corpus for the future. SIP investing has a variety of advantages, a few are listed below-

Power of compounding – The magic of power of compounding makes your investments grow manifold with time, thus ensuring you get the best returns out of your mutual fund SIP.

Simplicity in investing – It is simple, transparent and easy to start SIP investment.

Rupee cost averaging – This helps the investors to maximize the returns on their assets and allows them to balance out their cost of investment (known as NAV) by buying during both, falling and rising markets.

Customised investing – An investor can choose the amount, period, frequency as per their convenience.

Variety of fund options – Based on the requirement, an investor can choose whether to invest in equity or debt mutual fund schemes.

Considering the myriad advantages of SIP investment, we cannot miss out on the tools that help to make SIP investing simpler. SIP calculator is the primary tool that helps investors in estimating their future corpus after a definite period of time. However, the actual returns received from a mutual fund investment will vary based on various factors. The SIP return calculator does not provide clarification for the exit load and expense ratio (if any), this online tool will only calculate SIP returns for your monthly SIP investment.

How does a SIP Calculator work?

For simplifying decisions based on SIP investing, SIP calculator ask for simple inputs from the user, in order to throw the right results. One needs to know these before using the tool –

Goal amount – The amount one is aiming to reach after the period of investment.

Time period – The investment tenure for which you wish to keep investing.

Frequency of investing – SIP can be done daily, monthly, quarterly or yearly. One needs to choose the frequency as per their convenience and the amount that suits them.

Once the above factors are determined by the user, he/she can use the SIP calculator to calculate SIP returns and gain an understanding on the estimated amount of investment. Let us understand this with an example – Suppose, Mr. Naveen invests an amount of Rs. 12,000 monthly in a chosen mutual fund scheme, over a period of 5 years (60 months). Then, his estimated corpus, assuming 12% annual returns, would be Rs. 9,89,836.

The above calculation was possible in seconds, without the possibility of human errors due to the SIP calculator. Tools like these help new investors in gaining confidence for stepping foot in the world of investing.

In this read, we focused on a simple way to calculate SIP returns and how tools like SIP return calculator can aid the same.