Are you about to begin your investment journey? For a beginner, investing in a systematic investment plan could actually prove to be a great stepping stone as it is the way to build wealth in a disciplined manner. With the help of a SIP calculator you should be able to estimate the potential returns and plan your investments in an effective manner right from the scratch.
Something About Systematic Investment Planner
An online tool that helps in the calculation of the potential returns on the mutual fund investments of the investors made through the Systematic Investment Plans or SIP - that is what an SIP calculator is. This tool helps to provide an approximate future value of the investments made and that is based on various factors like the investment amount, the tenure and also the expected rate of return.
The process of calculating the SIP returns manually could prove to be extremely complex. This is so because each monthly contribution has a different holding period and therefore the return rate will also be different. The Systematic Investment Planner helps to simplify this process to a great extent by automatically calculating the estimated maturity amount.
However there are different factors like market fluctuations, expense ratios and exit loads as a result of which the actual returns may vary. The Mutual Fund Investment Planner does not account for these different variables but it gives a realistic estimate which helps investors a lot as they proceed ahead to plan their finances in a better way.
Some of The Advantages of The SIP Calculator
The Systematic Investment Plan or SIP calculator is an excellent online tool which has been designed to aid investors in the process of estimating the future value of their SIP investments. A clear breakdown is provided associated with two important figures and they are the investment amount and the estimated returns.
Investment amount refers to the total amount that the investor invests over time.
Estimated returns are associated with the potential growth of the investment made and it is based on a projected rate of return.
With the help of a SIP calculator, the investor can get a detailed overview of how the investments may grow given a specific period of time depending upon the contributions that are made every month and also the projected rate of return. This paves the way for effective planning of the different goals of investment.
With the help of SIP calculators, investors can estimate future returns from their SIPs and this is applicable for different scenarios. Varying rates of assumed returns can be inserted as input and the calculator enables comparing the different growth prospects that is possible to achieve through SIP investments.
Effective financial planning is possible with the help of a SIP calculator. Monthly investments can be planned to achieve the much coveted financial goals.
Periodic monitoring of investments is possible by using the SIP calculator.
Also the Systematic Investment Planner can prove to be useful when it comes to getting a realistic estimate of the investment growth particularly while dealing with the factor of inflation in the following way:
The target real rate of return needs to be determined first
The current rate of inflation can be used to calculate the nominal rate of return that the investor requires in order to achieve the financial goals.
This adjusted rate can be given as an input into the Mutual Fund Investment Planner for the purpose of getting a more realistic estimate associated with the growth of investment.
Thus it can be seen how this powerful tool, that is to say, the SIP calculator can actually prove to be a very useful tool by helping the investor in making informed decisions revolving around the mutual fund investments while taking into account some of the most important factors like that of inflation.
The Functioning of The Mutual Fund Investment Planner
A SIP calculator has a certain way of working and it goes like this:
The systematic investment planner makes use of mathematical formulae to estimate the future value of the investor’s SIP investments and this is based on certain specific inputs and that includes the monthly investment amount, expected rate of return, and also very importantly the associated period of investment. The monthly SIP amount that the investor contributes in a regular manner happens to be one of the most important inputs and it also acts as the principal investment.
The anticipated annual rate of return needs to be specified by the investor as this is used by the calculator to compute periodic as well as annualised returns. Though the past returns may help to provide an estimated growth projection. Also the duration of the SIP in years is required to be inserted and this is needed to calculate the returns over the different periods. The mutual fund investment planner provides estimates for 5, 10, 15, and 20 years and this gives investors the opportunity to choose timelines as per their requirement.
SIP calculators also enable investors to select a monthly or quarterly frequency of SIP investments, with monthly being more common. The period involves the number of months or the quarters over which the returns are calculated.
Final Note
Thus it was seen how very useful the SIP calculator can be. Also if you need assistance with mutual fund investments then you can always get in touch with Call Andii. Learn more about mutual funds and also find the Top Performing Mutual Funds to Invest in 2025.