An SIP calculator is an online tool that helps you generate a future projection of your investments into a mutual fund. With the help of an SIP calculator, you can plan your investments to align with your long term and short-term goals. The calculator is available online as a free tool and can be used to plan your investment before you start your SIP in mutual funds.
How does an SIP calculator work?
Investing in mutual funds through Systematic Investment Plans (SIP) is a convenient option through which you can build a corpus linked to your short-term and long-term goals. A small amount as low as Rs 500/- invested each month in an SIP can build a large corpus due to the power of compounding that the investment offers you. Calculating the return from your SIP investment is very cumbersome using a calculator or even on an excel sheet. An SIP calculator available online can help you understand in a few seconds how much you can hope to accumulate in a specified number of years with your mutual fund investment.
There are certain details you need to put in the calculator like your target amount, the number of years you want to stay invested, the regularity of your investments, and the expected returns on your investment. The SIP calculator will then calculate the SIP returns and help you decide on the amount that you should invest in order to reach your goal.
How can you use the SIP Calculator to plan for your financial goals?
For example, say you want to save up Rs 2 crore for your retirement. Let us say you are about 30 years old and you want to retire at the age of 60. This leaves you about 30 years to accumulate that amount. Using an online SIP calculator, you can calculate returns from your mutual fund investment and adjust the SIP amount to reach your target corpus in the available 30 years.
Benefits of using an SIP calculator
Using an SIP calculator has an important place in planning your investments. Let us look at some of the benefits they offer.
- The calculator helps you understand the future value of your small investments so that you can have clarity on which goals you can hope to achieve and which ones are to be realigned to fit in your priorities.
2. The calculator helps you plan exactly how much investment per month you need to reach your goals.
3. You can use the calculator to give you an estimate of the profit you can hope to make from a scheme based on the assumed rate of return.
4. The calculator helps to avoid cumbersome lengthy calculations as the formula fed into the calculators gives you results in a matter of seconds.
Use an SIP calculator before you plan your investments in a mutual fund to build a financial plan that can be achieved.
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