If you are planning to invest a fixed amount periodically in a particular mutual fund then SIP (systematic investment plan) can be a great choice for you. For instance, if you are willing to start a monthly SIP of Rs 10,000 in a mutual fund, the specified amount will be automatically deducted from your bank account on a monthly basis.
The deducted amount will be invested in the mutual fund, which makes it hassle-free for the investor as everything is performed automatically. The investor just needs to start the SIP and the rest of the process will be executed automatically.
In order to get the best returns, you should be aware of various factors. If you know the amount of return that you can achieve with a specified fund and tenure then it can be easier for you to select the most-suitable tenure and fund.
Here, a SIP calculator comes into play as it allows you to get assess the future return even before you invest your money.
Get to know about your returns prior to investing with the SIP calculator. SOURCE: financegab.com
What is a SIP Calculator?
SIP calculator is a tool that asks for various inputs and provides you with an approximate value of how much return you will be getting with a specified amount of money and tenure. Nowadays, investing in mutual funds with the help of SIPs has become quite popular in the country. A SIP calculator helps a newbie to understand how things work and how much return one can actually earn from investing in mutual funds. When people start investing via SIPs, they think about a round figure of the return for their goals and thus invest accordingly.
However, in most of the cases, the investors are not able to get the expected return and fail to achieve their goals. In that case, using a SIP calculator will be an intelligent idea. However, the return figure provided by this tool is not guaranteed as the market changes every day. So, the expected return figures and the real return figure can vary sometimes.
How to Use a SIP Calculator?
Using a SIP calculator is very easy and within a few minutes, it provides you with the desired results. It will allow you to plan your investment in a much better way so that you can get better results. Here’s how you can use a SIP calculator:
- In the first field, enter the amount you want to invest either manually or by using the slider. (varies from sites to site)
- In the second field, enter the tenure you are looking forward to investment.
- In the third and last field, enter the rate of interest that you think the market will be at.
- Lastly, press the submit button and get access to the results within a few minutes.
If the above steps are not clear enough then let us take an example. You want to invest Rs.2,500 each month for the next five years and the expected rate of interest is 15% p.a. Then, the returns that you will get are as follows:
- The interest earned: Rs.71,436
- The total amount invested: Rs.1.5 lakh
- The total amount on maturity: Rs.2,21,436
After you have your expected return, you can accordingly modify the tenure and amount of money you want to invest so that you are able to fulfill your goals in the future.
Pros of Using a SIP Calculator
There are a lot of pros that you can get if you are willing to use a SIP calculator before investing in mutual funds via SIPs. Some of them are mentioned below.
- It is very easy to use and a person even with very little knowledge regarding economics and funds can also use this tool without facing a single issue.
- It does not ask for any unnecessary details and only demands for three vital details required to show the returns.
- With the help of this tool, an investor can strategically modify his investments in order to get maximum returns and meet their future goals.
- One can take advantage of this calculator through the internet without paying a single penny.
- It makes it easier for first-time investors to understand the basics of investing in mutual funds via SIPs.
Investing in mutual funds via SIPs is a great way of growing your money and meet your future goals. It allows you to plan your future effectively and a SIP calculator makes things much easier. An investor is provided with an approximate value of returns that he can make with the specified amount of money and tenure.
It is easy to use and is surely recommended to each and every investor even if you are a professional investor. Using a SIP calculator is not only beneficial in getting an idea of future returns but if used strategically, it can assist you in planning efficient SIP investments. All these will translate into good returns over a course of time.