Investment is quite important for securing one’s future, and investment in SIPs is an ideal way to begin. A mutual fund SIP calculator serves as a good planning tool for SIP investment. It provides insight into the expected return by disclosing the potential growth with interest. It helps calculate the right amount to invest and the expected returns.
What is a SIP?
A systematic investment plan generally involves investing smaller amounts at regular intervals. It may be weekly, monthly, or quarterly investments. This method of investment in a mutual fund also helps manage the fluctuation in the market going upwards and downwards with time. Hence, purchasing units of a mutual fund at different price levels will lead to acquiring an average price for investments.
How Does a SIP Calculator Work?
The mutual fund SIP calculator is easy to use. You just need to insert a few details and get an estimate of the growth in investment. It considers the amount to be invested, the rate of return, and the time of investment.
Here’s how it works:
- Enter the Amount to Invest: This is the amount you will be investing regularly. It can be like ₹500, ₹1,000 or any amount that you select.
- Select the Period: This refers to how long you will invest your funds. It can be five years, ten years, twenty years, or any such period that you consider investing.
- Choose the Expected Rate of Return: This is the rate at which you expect your investment to rise. Returns on mutual funds normally depend on the performance of the market.
- Press Calculate: After filling out all this information, the SIP calculator will reflect the probable amount you should be having at the end of your desired period.
Why Should You Use a SIP Calculator?
There are many benefits of using a SIP calculator. It helps you plan better, as it gives you an idea of how much your investment would grow. Here are some reasons you should use a mutual fund SIP calculator.
- It is not Difficult to Operate: There is no requirement for technical knowledge to use a calculator. Fill in the details required and you will get the results at once.
- It Helps in Goal Planning: Be it your child’s education, a new house, or even retirement for you. It helps you know whether you are getting to the goal.
- It can be Compared Across Different Scenarios: Compare the investment amounts, time periods, or rates of return to see how much your investments will grow in each case. This will help you make better decisions.
- Less Time Consuming: You get your response within seconds. Hence, you can modify your investment plan when needed.
Steps to Use a SIP Calculator Online
Find the below steps to calculate an SIP calculator online.
- Find a SIP Calculator: Websites and apps, which are now available, provide free SIP calculators.
- Enter Your Monthly Investment Amount: This is the amount you will have invested every month.
- Determine the period: It may vary from even one year to several years based on the investment goals.
- Select the assumption for the return rate: Ener an expected rate of 10% or 12%, which is based on past historical patterns.
- See the result: Click the calculate button to see how large your total investment could grow at the end of the investment time frame.
- Modify input if results are not as expected: Adjust the monthly investment amount, extend the investment duration, or modify the expected return rate.
Things to Consider While Using an SIP Calculator
While an SIP calculator is a very useful tool, consider the following things.
- Returns are Not Guaranteed: Any return you enter is only an estimate and market conditions can lead to differences in the real returns.
- Inflation: In developing your long-term goals, do not forget that inflation reduces your purchasing power. Aim to earn a return that exceeds the level of inflation.
- Risk Factors: Mutual funds are always at market risk. Though SIPs minimise the risks of short-term declines, it does not protect one 100% from the risks.
- Consistency is the Key: To get the most out of your SIP, you have to invest regularly and not miss a single payment.
Conclusion
An SIP calculator online helps you plan your SIP investments by understanding how your money will grow in the long run. It tracks your financial goals if you want to save for some big purchase or for future planning. The online SIP calculator allows you to go through different scenarios and choose the one that best suits your needs. Hence, it offers you control over your investments and helps make steady wealth over time.