SIP is the abbreviated form of Systematic Investment Plan which is a process of investing a definite amount of money in the mutual fund’s scheme and that too at regular intervals. Through, SIPs the individual or group of individuals can invest weekly, monthly or quarterly according to their opt method.
Introduction to Mutual Fund SIP calculator
With the help of a SIP calculator, an individual will easily be able to figure out the returns of the investment of their mutual funds that are made through SIP. This, scheme has become pretty famous among the generation of Millennials. Through this mutual fund SIP returns calculator, the investors will be able to figure out an estimated digit on the respective mutual funds.
Still, it has to be strictly kept in mind that the original returns that the mutual fund scheme offers are exclusively based on numerous other factors. Hence, the SIP returns calculator does not give a clear clarification on the exit load and expense ratio, if any exists.
This SIP calculator will do an estimate calculation on the expected returns and the wealth gain for the monthly SIP investment. The result of the calculation will be able to give a rough calculation on the maturity amount of any of the monthly SIP which is usually based on the projected annual return rate.
SIP calculator uses
When compared to a lump sum amount, the SIP calculator mutual fund is profitable when it comes to the investments of funds concerning several mutual fund experts. It is considered essential as through this being financially disciplined is estimated which will hence create a generous habit of savings which will, in turn, benefit the future.
Thus, in the case of mutual fund calculator, SIP is labeled as a beneficial tool through which the estimated returns are more or less likely figured out that one will earn after the investment tenure.
Out of many uses, the following are a few of them that has been jotted down and discussed likewise:
- Assisting the individual in determining the amount they would want to invest in
- Figuring out the total amount that is to be invested
- Giving out an estimated value of the returns.
Working on the SIP calculator
A SIP calculator follows the below-mentioned formulae:
M= P ({[1 + i ] n-1 }/ i ) × (1 + i )
Where,
- M is the total amount that is received during maturity
- P is the amount of money that is invested at regular intervals
- n denotes the number of payments that are made
- I is the periodic rate of interest
Although there is no need of computing manually as one can find a SIP investment calculator online anytime, it will always come in handy if one will identify the numbers that come from them are strong and confident enough for their investment strategy.
SIP calculator benefits
It is very important to conduct thorough research and analysis before initiating any investment decisions. Meanwhile, one must thoroughly comprehend all the possible returns before conducting the investment so that it can be figured out whether or not the investment is profitable or not.
Apart from this, it has to be strictly taken into consideration that both the final objective of the investor as well as the investment objective of the asset is properly aligned. This thing will enable the investors in selecting the right asset which will help them in identifying the goals sooner.
Here are some of the benefits that can be availed through the SIP mutual fund calculator:
- Easy to use
The navigation is pretty much easier in a SIP calculator online. Using this calculator will save a great amount of time for the investors in case they are doing a bit complex calculation where the calculator does a rough sketch of the maturity amount along with the monthly investment in no time.
- Estimating the maturity amount
The possible returns at the end of the investment duration are estimated through this mutual fund calculator. Figuring out the investment amount just in case the investor really wants to know.
- Tabular and graphical representation
The estimated returns are shown both in the form of tabular as well as a graphical representation for better interpretation and initiating a rigid and definite decision easily.
- Maturity amount depending upon the growth scenarios
Three growth scenarios are taken into consideration for estimating the returns. Here, the three growth scenarios are based on above-average, average, and lower-average returns. Thus, this will give the investors an idea as to how and which scenario will align with the investment requirements along with starting the investing.
- Stepping up
Through the mutual fund SIP calculator, the investor will be able to step up their investments on an annual basis where the step-up details will be easily found in the format of a table of the maturity amount estimation.
- Informed decision
Comparison of the multiple return scenarios with the free SIP return calculator can be done by the investor so that the right decision can be made concerning this which in return will help them in gaining significant returns.
Steps to invest in the SIP or Systematic Investment Plan
The following are the steps involved in investing in the Systematic Investment Plan:-
- Step 1– Prior objective should be to analyze the objective thoroughly before initiating further with the investment. Setting the financial goals will help the investors in recognizing the right asset class for the respective investment.
- Step 2– In this step, the selection of the right category of the mutual fund depends upon the exposure that the investor is willing to have in the equity or the debt.
Before initiating the investment, the investors must complete the application form that should be then followed by submitting the identity and address proof and completion of KYC details.
- Step 3– In this step, one has to select the date of the SIP which can be done either by the investor himself or by enabling the auto-debit option.
Though it has been said that SIPs and mutual funds, however, they are not. SIPs indulge in the method of investing in mutual funds whereas the other method is that of the lump sum. Through a SIP calculator, it will be easier to calculate the returns that one can easily avail in the case of parking the funds in these investments’ tools.
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