What is SIP Mutual Fund Calculator?

 A systematic investment plan enables an investor to invest regularly a fixed sum of money at regular intervals, like monthly, weekly or even daily, in a scheme of his/her choice. The money collected via systematic investment plan is in turn invested in equities or debt instruments by the fund manager depending upon the scheme mandate.

SIP mutual fund helps us build long term wealth through the benefit of power of compounding and rupee cost averaging. Investing in SIPs is easy and convenient for investors as they can invest online with a few clicks and with the help of a single mandate, the chosen SIP amount is deducted per month/ or the frequency chosen from the investor’s bank account.

You must have heard that SIP investing is for the long term which helps to reach financial goals. While there is no denying the above fact, the reality is that simply investing in mutual funds for long term via SIP may not help you achieve these goals.

Then what will help you achieve your future financial goals? It is the ‘right SIP amount’  

What is the right SIP amount?

To decide the right SIP amount for your systematic investment plan, you need to know the following –

Future financial goal amount at current cost

After how many years you want to achieve your goal

Average annual inflation rate

Future goal amount after accounting the average inflation over the goal time period

Return expectation on your SIP

Know the SIP amount to reach the inflation adjusted goal amount

In order to facilitate this decision, an online tool called SIP Calculator is used. Financial calculators have simplified decision making in mutual fund investments. These are online tools that helps one calculate an estimated corpus on their investment, over a period of time or how much they need to save from today for potentially reaching their desired financial goal. Either way, these online calculators can be accessed in a few clicks by investors which help them plan for SIP mutual fund, lumpsum investment and goals like retirement, child education, car loan, buying a house, etc.

Mutual fund SIP calculator will ask you to input the amount you wish to invest in a SIP and the frequency, say monthly along with the time horizon. Then, with an assumed rate of return, it shows an estimated corpus that you can expect to accumulate.

For example, if Vijay invests Rs 20,000 monthly through systematic investment plan for 10 years, he can accumulate more than Rs 46 Lakhs, assuming 12% annual returns. In this case, the invested amount by Vijay over 10 years is only Rs. 24 Lakhs. Therefore, the SIP calculator helps him understand the corpus he can potentially accumulate. This also helps in planning monthly finances and understanding how much to keep aside to invest for attaining desired financial goals.

SIP Calculator gives one the advantage of planning without the hassle of manual calculation. It is fast, easy, can be accessed online and used as per convenience. It also gives confidence to new or potential SIP mutual fund investors as they get more clarity on how much to start investing with and what they can expect out of the process.

Systematic investment plan is a hassle free way of making mutual fund investments. Diving further into the concept, we have also talked about SIP Calculator – an online tool for investors to use anytime, in order to make informed investment decisions.

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