SIP Return Calculator
Table of Contents
A SIP calculator is a simplified online tool that permits individuals to have an idea in regards to the returns upon the mutual fund where the investment has been done through a SIP. Besides, it is important to understand that the actual returns provided by any of the schemes of mutual funds depend upon different factors. In the case of the expense ratio and exit load, the SIP calculator will not offer any clarification for the same. This gives you a rough structure and a fair idea of the estimate on the amount of maturity for the SIP monthly on the premise of the projected yearly rate of return.
What is an SIP Calculator?
The SIP calculator is designed in a way that it gives the investors an estimate of the respective investment of the mutual fund. The calculation can be done manually as well via the SIP Calculation formula.
SIP Calculation Formula
The following formula is used to calculate the SIP plan amount:
FV = P x ({[ 1+ i ] ^ n-1 } x (1+i)
Here is the elaboration:
FV = Future Value (The amount to be received after maturity)
P = Amount that the investor invests
i = The rate of interest periodically
n = Total number of payments made by the investor till date.
Let us understand the formula with an illustration:
Mr. X invests an amount of Rs. 1,000 per month in an SIP for 1 year (12 months) at a rate of interest of 12%. By these figures, the monthly return will be around 12% / 12 = 1 / 100 = 0.01
So, when we put the figures in the formula:
Future Value = 1,000 x ({[ 1 + 0.01 ] ^ {12 – 1 } / 0.01 ) x ( 1 + 0.01)
After calculation,
Future Value = Rs. 12,809 (approximately).
How to Use an SIP Calculator?
Using a SIP calculator is a much-simplified process. Therefore, to avail the estimate of the return upon the investment made on the mutual funds via SIP through this tool, you need to follow the below-mentioned easy steps:
Step 1: Provide the duration of the SIP which means the period wherein you wish to invest in the scheme of the mutual fund. The duration of the SIP could vary from months to some years.
Step 2: Gauge the pace of profit for your investment. You can decide this by checking the presentation reputation of the scheme of mutual fund to which you want to contribute. You can get insights about the profits of a mutual fund scheme to conspire either from the fact sheet, which is available on the website of the specific fund.
Step 3: The SIP calculator provides either the month-to-month SIP sum that you intend to put resources into a mutual fund plan of your decision or the objective corpus. If you fill in the measure of month-to-month speculation you are prepared to make, at that point assessed returns at development time are given. If you are utilizing the number cruncher to assess how much cash you have to put resources into a common reserve plan to get a particular sum toward the finish of your SIP period, at that point enter the objective sum and the calculator will give the data of a necessary month to month investment.
The SIP calculator will display the accumulated amount towards the end of the tenure of the policy. You can also see a comparison of the accumulated sum of the mutual fund invested along with the fixed deposits.
How Does SIP Calculator Work?
A SIP calculator essentially works wherein the users enter the values, which implies that the users need to provide the information in regards to the investment amount, investment frequency, investment duration, and the returns expected.
Based on the formula of compound interest, the SIP calculator has specifically been designed. The interest of the compound powers the returns on the mutual funds. The SIP calculator also enables one to get a comparison of the offered returns by the mutual funds along with the deposits that are fixed.
Advantages of Using the Systematic Investment Plan Calculator
Listed below are the key advantages of using a SIP calculator:
- It gives you an estimate based on, which you can plan your finances in a better manner.
- The SIP calculator permits you to have an estimation of the amount, which the mutual fund would accumulate towards the end of the tenure of the SIP.
- This estimation permits the individuals to opt for the right sort of scheme of the mutual fund.
Conclusion
You can easily use a SIP calculator online and can easily know the estimated returns that you would acquire post the tenure of SIP. It also helps you to determine the amount that you wish to invest informs you regarding the complete amount invested and gives you the estimated value on the returns.
Also read: Term Insurance - Better Than FD
