When it comes to investing in Indian financial markets, Systematic Investment Plans (SIPs) have become increasingly popular among investors. In simple terms, SIPs allow individuals to invest a fixed amount of money in mutual funds at regular intervals. SIP calculators are a vital tool that helps investors to plan their investment strategy and calculate their returns.
What is a SIP Calculator?
A SIP calculator is an online tool that helps investors calculate the potential returns on their investments through SIP. It is an easy-to-use tool designed to provide investors with an estimation of their investment returns over a period of time. The calculator considers the SIP amount, investment tenure, expected rate of return, and the frequency of investment while providing an estimate of the returns.
SIP calculators are readily available online on various financial websites and mobile applications. Several asset management companies have also developed SIP calculators on their websites and mobile applications that allow customers to calculate their investment returns. These calculators are free for anyone to use, and users do not need to be customers of the asset management company.
How to Use an SIP Calculator?
Using an SIP calculator is very simple. To calculate the estimated returns on your SIP investment, follow the steps given below:
1. Enter the investment amount: The first step is to enter the investment amount that an investor plans to invest through SIP.
2. Input the investment period: The next step is to enter the period or the tenure of the investment in months or years. ‘Investment period’ refers to the duration for which the investor plans to continue investing in SIP.
3. Enter expected rate of return: In this step, an investor has to input expected rate of return. It represents the estimated growth rate that an investor is expecting from the investment and varies depending on the mutual fund selected for investment.
4. Select investment frequency: An investor needs to select the investment frequency that he/she wants to opt for SIP- monthly, quarterly or yearly.
5. Click on ‘Calculate’: Once all the above information is entered, click on the ‘Calculate’ button, and the calculator will provide an estimated amount that investor is expected to receive at the end of the investment period.
Why use SIP calculator?
SIP calculator is an essential tool that helps investors plan their investment strategy and make an informed decision on their investment. Here are the reasons why SIP calculator is vital:
1. Helps in Goal-based investing: SIP investment can be an effective way to achieve long-term financial goals, like buying a house, higher education of children, or retirement planning. The SIP calculator can help investors determine how much to invest regularly to achieve their financial goals.
2. Assessing return on investment: The calculator provides investors with an estimation of their returns over the duration of the SIP. It helps investors to assess the expected returns they can receive on their investment, aiding decision-making and investment planning.
3. Helps in Choosing between various mutual funds: SIP calculators can help investors compare the potential returns of different mutual funds and choose the one that is best suited to their investment goals. It can help investors make an informed decision by providing projections on the returns of different mutual funds.
4. Facilitates Financial Planning: SIP calculator helps investors plan their finances by providing an estimation of expected returns on investment. The estimate provided is vital in creating a financial plan for the future and ensuring a better financial wellbeing.
Conclusion
Investing in SIP is a great way for an individual to achieve long-term financial goals and grow their wealth. SIP calculators are an invaluable tool that helps investors plan their investment strategy, assess their expected returns and choose the best-suited option to match their investment goals. It is imperative to note that investors must gauge all the pros and cons of investing in Indian financial markets as well as the risks associated with it before making an investment decision. Finally, using an SIP calculator can help investors make an informed decision about their investments and aid them in achieving their financial goals.
Disclaimer: Investing in the Indian financial market involves risks, and investors must conduct their due diligence before making any investment decision.
Summary
SIP Calculator is an online tool which helps investors to calculate their potential returns on investments through SIP. It is an easy-to-use tool that takes the SIP amount, investment tenure, expected rate of return, and investment frequency into account. SIP calculator helps investors to plan their investment strategy, assess their expected returns, and choose the best-suited option for their investment goals. The tool is beneficial in financial planning, assessing returns, and comparing mutual funds. SIP calculators are available on various financial websites and applications, and it is imperative to note that investors must conduct their due diligence before making an investment decision.
