SIP Calculator: A Brief About Everything You Need To Know

A systematic investment plan (SIP) is a popular method of investing your money that helps create a sense of financial discipline and regular investment habits.

This investment route extends the flexibility to mobilize a small part of one’s savings towards an investment instrument regularly. This approach helps build up wealth with a limited sum by allowing the amount to grow over time. 

Yet, to fully take advantage of the benefits of the SIP, you can use investment calculators like mutual fund calculators to plan out your investments and create some strategies to support them. To fully optimize the benefits of SIPs, individuals must implement appropriate strategies. 

Such a tool allows users to compare multiple approaches and pick one that suits their requirements the most.

With this basic understanding, let’s learn more about mutual fund SIP calculators and check how the tool can help enhance their investment planning.

What is An Online SIP Calculator?

Mutual Fund SIP calculators are effective tools that help users find the potential returns on investments. The online calculators use factors like the investment amount, expected returns, horizon, and compounding frequency to find projected earnings. 

The calculator comes with a built-in formula, which helps it compute returns in a couple of seconds by feeding details into the tool. Its user-friendly interface lets them access all the required information within a couple of seconds. 

The simple design and easy method allow you to check the details of your chosen plan without the need to be tech-savvy or have an in-depth understanding of SIP.

DID YOU KNOW?
The accuracy of the SIP calculator is directly proportional to the accuracy of the rate of return. The actual returns delivered by a mutual fund scheme depends on many factors.

SIP Calculator Formula

The investment calculator is pre-programmed with a formula that helps you calculate SIP returns for the given timeline.

FV = P [ (1+i)^n-1 ] * (1+i)/iFV

In this formula,

FV indicates the estimated amount

P indicates the principal amount 

i indicates the compounded rate of interest

n indicates the tenure, which is expressed in months

r indicates the  rate of return

SIP Calculation Example

Q> Suppose Raghu plans to build a robust fund within a timeline of 24 months. To achieve his monetary goals, Raghu decided to park a sum of Rs. 2000 monthly in high-paying mutual funds via the SIP route with the hope of generating 12% on his annual investments. 

A>

Based on the SIP formula –

FV = P [ (1+i)^n-1 ] * (1+i)/iFV

FV = 2000 * [(1+0.01) ^24 – 1] * (1+0.01)/0.01

(i = r/100/12)  

At maturity, the SIP will help Raghu generate Rs. 54,486. 

One can use the SIP formula to calculate the maturity returns manually. The manual process would likely be lengthy and involve multiple steps. Besides, the process would be time-consuming and could result in many calculation errors. 

Also, individuals can avoid the situation by using the calculator, which helps determine accurate results in just a couple of seconds. 

Since the MF SIP calculator can be opened and used for free, you can use it multiple times until you find the best fit and make the most of your mutual fund investment accordingly. 

What are the Steps to Use SIP Calculator

It’s pretty easy to access a SIP calculator online and use it in these easy steps –

• Step 1: Check reliable investment websites and visit one
• Step 2: Navigate to its SIP calculator page
• Step 3: Open the online SIP calculator 
• Step 4: Enter key personal and financial details
• Step 5: Enter the frequency of investment via SIP

After all the fields are fed with the required details, you can determine the returns on investment and maturity amount within a couple of seconds.

If the outcomes do not suit your expected investment goals, you can quickly readjust the variables in the calculator and find which plan suits their needs the best. 

You can also use the tool multiple times without any delays and compare different plans.  However, this approach will only work if the user has a clear idea about their investment goals and expectations. This is because the groups will act as a parameter to compare the plans with and gain insight.

What are the Key Features of the SIP Calculator?

These are the key features and related benefits of the SIP Calculator –

An SIP calculator comes with a user-friendly design that allows smooth and hassle-free navigation.  

This allows you to choose the viability of their financial goal by simply entering details like investment amount, rate of return, and investment horizon into designated fields. The tool uses these details to help users compute their SIP returns without delay.

The online investment tool helps streamline the process of computing SIP returns by eliminating the need for manual calculations. This feature helps save time and helps users focus their time on weighing the different SIP strategies. 

This will help make an informed investment decision and plan the same through the tool.

Helps in Financial Planning

Online SIP calculators allow you to plan your investments more efficiently. These tools help them readjust many things, like investment amounts, timelines, and compound frequency, to calculate their RoIs pretty accurately.

Plus, this tool is pretty flexible in matching your financial needs and objectives and helps you make the most of inflation-adjusted returns.

With this in mind, investors can build a pretty formidable SIP portfolio over time. However, there is a need for investors to learn how to practice reallocating their portfolios and reassigning assets to understand how they could help reach their goals.