A Systematic Investment Plan (SIP), sometimes known as a SIP, is a mutual fund that allows participants to invest in a systematic way. The SIP function allows an investor to invest a pre-determined amount of money in a mutual fund scheme over time.
The fixed amount can be as low as Rs. 500, with weekly, monthly, quarterly, semi-annually, or annually pre-determined SIP periods. An investor can invest in SIP over time without worrying about market swings, and he or she will gain in the long term due to average costs and compounding power.
So, how will you be calculating your SIP based on your financial goals?
What is SIP Calculator?
A Systematic Investment Plan (SIP) calculator is a web-based application that estimates the return on your SIP investment based on a projected rate of return and the investment’s future value after a set number of years. Because SIPs usually need a monthly payment, manual calculating might be time-consuming.
The returns for each payments will range ever since the holding period for each monthly contribution will vary at any given point in time.
You can use this calculator to plan significant life and financial goals like buying a dream car, financing your wedding, living a happy retired life, and so on, by simply entering a few details such as:
- The quantity of your SIP
- The total number of SIP payments (in months)
- Amount of Instalments Paid So Far
- Annualized anticipated return
With only one click, the SIP calculator will calculate the maturity amount of your investments in a fraction of a second. The days of distributors, relationship managers, and agents deceiving clients by complicated return calculations and promising unrealistic returns are long gone. This Systematic Investment Plan calculator assists investors in making informed financial decisions.
How can a SIP Calculator help you?
The Systematic Investment Plan calculator, as you may know, allows you to assess three figures: your principal, the returns received on the principal, and the investment’s future value. It calculates how much you’ll make on your investment if you put in X amount per month for N number of years at a I rate of projected return. These figures can be entered into an online SIP calculator.
Formula used by SIP Calculator: FV =P * ( R * ( 1+i )n -1 )* ( 1 + i )i
FV stands for Future Value.
P is the number of SIPs.
I represent the compounded rate of return
Because each investment installment’s returns are compounded, the monthly SIP will be compounded as i/12
Daily SIP will also be compounded as i/365
Let’s imagine you’re saving for your child’s college education. You’ll need a total of 20,000 lakh in five years, and you may start investing 20,000 every month right now. If you don’t mind taking risks, you can expect to earn an average of 12% per year over the following five years.
When you put the information into a calculator, you get the following results:
For example, if you want to invest a fixed amount each month for 5 years, you can use ET Money’s SIP returns calculator to quantify the future value of your investment by:
Invested capital: Rs. 12 lakh
Profits: ₹4.5 lakh
Future value: ₹16.5 lakh
Advantages of SIP Calculator
Immediate Results: It’s never been easier to estimate the future value of your investments. You don’t have to waste time calculating figures.
Simple to Understand and Use: The SIP Calculator and Planner is simple to use, and you don’t need to be a math genius to estimate your investment needs. Furthermore, it is free to use and can be used endless times.
Helps You Make Informed Investment Decisions: If you’re saving for a specific goal, it’s critical to plan your investments. The SIP Calculator assists you in estimating how much you’ll need to save to meet your investment goal with the least amount of effort.
Find the Best Contribution Options: Unlike other calculators, we go far beyond just calculating the possible future value of your investments or the monthly investment amount required. We also present you with a selection of funds that could be able to help you attain your investing goals as part of our commitment to providing you with the finest SIP planner.
Conclusion
SIPs can help you develop a regular investment habit while also helping you expand your wealth. But, before you choose a SIP, make sure to use a SIP calculator to see if you’re making the appropriate choice.