A Systematic Invest Plan, commonly referred to as SIP, is a tool that lets you invest in mutual funds schemes regularly in a systematic manner. The potential returns on investments on the SIPs can be easily calculated using a SIP Calculator, aka Mutual Fund Calculator.
What is a SIP?
SIP is a systematic approach to investment that allows an investor to allocate a fixed amount of money to invest at pre-defined intervals in the market. The allocated amount of investment can be as low as just Rs. 500, and the pre-defined intervals for the SIP can be on a weekly/monthly/quarterly/semi-annually or annual basis. It is similar to a recurring deposit.
SIP has been gaining immense popularity among mutual fund investors in India. It is a preferred investing method as it allows you to enter the market without worrying about volatility and timings. Its flexibility, rupee cost averaging and the ultimate benefits of compounding help in generating long-term wealth.
You can easily calculate the estimated potential returns on the MF you’ve invested in by using a SIP Calculator.
What is a SIP calculator?
Investing through SIPs in mutual funds is a popular investment option for millennials.
A SIP calculator is a simulation that allows you to calculate the estimated return on mutual fund investments made through a SIP. These calculators are designed to give potential investors a heads-up on their mutual fund investments.
How can SIP calculators help you?
According to mutual fund experts, SIPs are a more rewarding way of investment than lump-sum. They help you develop financial discipline, which is highly beneficial in the long term.
We all want a fair idea of how much returns the SIPs can get us, and SIP calculators can help you estimate that.
The returns on SIP are calculated as per compound interest. To know your expected returns, all you need to do is enter your desired monthly investment amount, select the number of years to invest in the SIP calculator.
Here are some benefits of using a SIP calculator-
- Fast and Simple – The calculator is easy to use and quickly estimates the returns that would accumulate from the minimal monthly deposits. Therefore, investors can strategically plan their investments to achieve their long-term financial goals and objectives.
- Minimal information – Other than information about the investor’s monthly investments, the duration of those investments, and the rate of return on the fund they invest in, no more information is needed.
- Free of cost – The calculators are available online or on mutual fund apps and are totally cost-free to use.
- User Friendly – SIP Calculators are favourable for both, the ones who have financial knowledge and the ones who do not.
Do note that the SIP return calculators can vary from company to company.
SIPs are one of the most rewarding ways of investment that comes with comparatively less risk and SIP calculator helps you in assessing your potential returns. Something that a user must keep in mind while using a SIP calculator is that the output accounted is after taking into consideration the possible rate on inflation and capital gains tax. You may also use a lump sum calculator in order to know the maturity amount of your one-time investment.