SIP calculator also referred to as a Systematic Investment Plan Calculator is a technique that lets you gauge the amount of return that you will get on a Mutual Fund. Many novice investors end up believing that Mutual Funds and SIPs are the same. However, SIPs are more like tactics that help you to invest in Mutual Funds. This method of using SIPs to invest in Mutual Funds is quite a popular way of investing for millennials.
SIP calculator is a widely used tool that helps investors by estimating their return on the mutual fund investments. However, the estimation of the actual return depends on a variety of factors. The exit load and the expense ratio is not accounted in the SIP Calculator (If any). SIP Calculator is a tool that is available online and is used to calculate the amount of SIP based on a certain expected annual return for your monthly SIP investments. This way Sip calculator helps you relieve your worries about planning you financial goals and future plans while maintaining financial safety and security.
An SIP calculator takes inputs of various values from the users. The values required to make use of an SIP calculator are:
The SIP calculator formula as devised on the basis of the formula used for compound interest. Compound Interest is the powering factor of Mutual Funds. The formula for SIP calculator is shown below:
F= P [(1+i) ^ n-1]*(1+i)/i
F= the amount that you will receive upon maturity
P= amount that you have invested through SIPs
i= the compounded rate of return
n= the number of investments that you have made
We can understand this formula through the following example. If Raman invests Rs. 2,000 per month for a time period of 24 months and you expect a 12% annual rate of return. Then, you have:
i= r/100/12 or 0.01
F= 2000*[(1+0.01) ^ 24 -1] * (1+0.01)/0.01
F= Rs. 54,486
Therefore, the estimated return that you will receive will be Rs. 54,486 as calculated by the SIP Calculator.
As per some of the mutual fund experts, SIPs are a profitable mode of investing your funds as compared to investing your money in lump-sum amounts. It helps you in establishing a financially disciplined attitude and also helps you in creating a habit of saving money that will be benefitting you in the future.
An SIP calculator can be easily used online and is a very advantageous tool, which calculates your estimated returns that you will end up with after maturity of your investment. Some of the benefits of the SIP calculators are listed below:
Some of the basic information that you need before utilizing SIP are: