Systematic Investment Plans (SIPs) have become popular among millennial investors recently. SIPs are a disciplined and practical approach to a mutual fund investment. Invest in SIP if you can’t afford a lump sum investment. Through SIP, you invest in the mutual fund monthly rather than at once. To start investing in SIP, you must determine the SIP investment amount. An online SIP calculator can help you identify the investment amount.
What are SIP calculators?
A mutual fund calculator is a free online tool that allows you to estimate the returns you could earn through SIP investments. However, please note that these calculators provide a rough estimate of the returns. In reality, mutual fund returns depend on several factors. For instance, the SIP calculator does not consider factors like the exit load and expense ratio. It is an online tool for calculating the investment amount based on an expected annual return.
How are SIP calculators helpful?
Online SIP calculators are helpful in the following ways:
- They help you formulate your investment plan
- They don’t cost you anything. These calculators are free to use
- The estimated value of returns can help you determine the investment amount
How do SIP calculators work?
These calculators are accessible and easy to find. After finding one, first, enter the values in the SIP calculator. Include the investment amount, frequency, horizon, and expected returns. The SIP calculator uses this formula:
M = P × ({[1 + i]n – 1} / i) × (1 + i)
M = Maturity amount
P = investment amount
N = The number of payments
I = The periodic rate of interest
For instance, you invest approximately ₹1,500 through SIP for five years with 5% as the rate of return. Upon maturity, you would acquire over ₹1,00,000.
What are the benefits of SIP calculators?
Here are some of the advantages associated with online SIP calculators:
- Simplifies investing:
Online mutual fund calculators have simplified the process of investing. Apart from being accessible, these online tools are easy to use. Just modify details like your financial goals and expected rate of returns, and you will get the investment amount. Furthermore, some calculators will show you various investment amounts based on differing investment horizons.
- Formulate a plan:
These calculators can help you formulate a plan before time. They provide you with different investment scenarios. This feature will assist you in preparing an investment plan that will help you achieve your financial goals without burdening your monthly budget.
- They are free:
There are no charges for using these tools. Furthermore, there is more than one online mutual fund calculator available. Different AMCs offer specifically designed SIP calculators. For instance, some calculators provide different investment amounts for varying investment horizons.
Conclusion:
SIP calculators have changed the world of mutual fund investments. They have made SIPs even more appealing to the current generation of investors. So, what are you waiting for? Start investing in online mutual funds and reach your goal of becoming a millionaire!
