Numbers are involved in financial planning. You realise that they provide straightforward mathematical solutions to many money-related concerns when you try to understand them. There are several calculators available that can make crunching numbers easy. There is a SIP calculator among them.
SIPs, or systematic investment plans, are well-liked investment strategies. Through disciplined investing, households manage their finances with little contributions from individuals. Depending on your preference, a specific amount is initially invested quarterly, monthly, or yearly. SIP can be helpful if you want to protect your money from the market’s short-term volatility.
What is a SIP calculator?
An online financial tool called a Systematic Investment Plan (SIP) calculator can assist you in figuring out the returns on your SIP investments. The calculator shows you how much you must invest each month in accumulating your desired corpus. It provides a roadmap for reaching your various financial goals.
The calculator may be rather effective at quickly conducting intricate financial calculations without a pen and paper. Only a few inputs are also required, and the calculator soon calculates the result.
How does the SIP Calculator work?
The SIP calculator uses the compound interest formula to determine potential returns. The calculator estimates future returns while considering how often compounding is significant. The SIP calculator also requests information regarding the monthly contribution amount, the years the investment would last, and the anticipated SIP return percentage.
The maturity amount and wealth to be earned from the mutual fund investments will both be calculated automatically by the online SIP calculator. The monthly investment amount for the specified term and growth rate can also be determined by entering the target amount corresponding to the investor’s financial aim.
How does SIP Calculator work?
The SIP Calculator formula:
M = P × ({[1 + i]n – 1} / i) × (1 + i)
- M is the sum you will be paid upon maturity
- P is the sum that you consistently invest
- n represents how many payments you have made so far
- i is the periodic interest rate
For instance,
You’re investing Rs1,000 each month for a year at an interest rate of 12%.
The monthly rate of return would be 12%/12 = 1/100 = 0.01
Consequently, you will receive around 12,809 in a year.
However, consider that the interest rate on mutual funds varies depending on the state of the market. It could go up or down, which would affect the projected returns.
Benefits of the SIP calculator
- The systematic investment plan calculator makes it easier to know how much will have been amassed after all periodic payments have been made for the selected duration.
- You can select the best mutual fund scheme by predicting future value or the maturity amount.
- The SIP calculator is simple to use and is available everywhere. When you need to execute complicated computations, it greatly reduces your time commitment.
- To help you decide more wisely before investing, the SIP calculator offers both graphical and tabular representations of the return estimates.
- Using the SIP calculator online, you can get estimates using three distinct growth scenarios, such as above-average and below-average returns. You can choose the investment strategy best suits your needs and get started.
- You can explore several return possibilities and decide on an acceptable investment strategy using the free SIP calculator available online.
In a nutshell
With two numbers—the predicted return investors may expect to get on their investment and the principal—the Systematic Investment Plan calculator provides investors with a breakdown of the future worth of the SIP investment.
Therefore, assuming a specific rate of return and SIP contribution, you may use the SIP return calculator to gain a general idea of how your investment will increase over a specific holding term.
