What is a SIP Calculator
|sip mutual fund
|sip return calculator
A SIP or Systematic Investment Plan is a smart way of investing your money periodically, in small amounts, over a certain tenure, with financial discipline. You can adopt this method for planting hard-earned savings in certain mutual funds for meeting future financial goals. This is slowly becoming a popular method for investing as it is convenient, hassle-free and comes with the advantage of the power of compounding.
Let us understand this important concept more- Simple interest implies that you earn interest on your principal amount. But, in the case of compound interest, you earn interest/return on the principal amount as well as the accumulated returns or interest amount over the period of your investment. Over time, the compounding effect snowballs into a substantial amount. With patience, disciplined investing and the right guidance, this can help you create a good corpus over time, to meet your financial goals.
Having spoken about SIP mutual fund, let us also speak about a tool that aids it – the calculator. It is a smart and easy-to-use tool that helps investors calculate an estimate of what they can expect as their corpus from SIP investment. Since mutual funds are subject to market risks, only an estimate of the returns can be made- an exact figure cannot be forecasted as the returns are market linked. Hence, in the face of uncertain returns, smart tools such as the SIP return calculator, instill confidence in new investors and also helps them in advance planning of finances. It works with a few details entered by the user- such as the expected rate of return, investment tenure, SIP amount, etc. Let us understand this clearly with a simple example-
For example, if Vishal starts a monthly SIP of Rs 20,000 in a mutual fund. For 10 years period, he can accumulate a corpus of over Rs46 Lakhs, assuming the return rate to be 12%. In this case, the amount invested by him over 10 years is only Rs24 Lakhs. Thus, the tool helps him in understanding how much he can expect from the SIP investment he is making after the 20 years period and thus plan his financial goals.
SIP return calculator gives investors the advantage of planning without the hassle of manual calculation. It is fast, easy, and can be accessed online and used at per convenience.
A different function of the SIP Calculator helps investors and that is the target-based SIP Calculator. Here, one enters the goal value that they aim to reach after investing over a certain time period. Then, this tool tells you how much to invest monthly in a SIP to reach this value. Suppose, Vishal wants to have a corpus of Rs 10 lakhs after 10 years through his SIP Investment. He assumes 12% returns and inflation as zero, we find that the ideal monthly SIP Investment for him would only be Rs 4,347 only.
The above calculation could be managed easily using the SIP Calculator.
In this read, we took a look into an easily accessible online tool known as the SIP calculator that helps in making informed investment decisions for your SIP investment. Investors can use the SIP return calculator with ease to make well-informed choices when it comes to questions such as what can be expected out of SIP mutual fund investing and how much should be invested for reaching one’s financial goals.