SIPs are a means to periodically invest a set amount of money in mutual funds (weekly, quarterly, or monthly). It is a practical approach to invest in mutual funds because you don’t have to start with a large initial commitment and can begin with as little as $100.
The returns on your SIP calculator investments can be calculated with the use of a sophisticated and simple instrument called a Systematic Investment Plan SIP Calculator. You can use sip calculator to estimate how much money you will need to put aside each month in order to achieve your goal. It’s a practical tool for accomplishing your financial objectives quickly. By providing a few simple facts, you can quickly determine the projected returns on your investment.
Read: Best SIP Plans in 2022
SIP Calculator: What Is It?
For any investor who wishes to make a SIP investment, sip calculator is the most practical tool. The investor should be aware of the term, anticipated interest rate, and SIP amount before utilising the SIP calculator.The investors can calculate expected amounts without having to delve into a difficult mathematical procedure thanks to this simple-to-use SIP calculator application. The investor can adjust the inputs appropriately to obtain the right predicted return.
After utilising this simple method, you can completely eliminate the difficulties of routine investments in order to calculate the precise value with 100% accuracy.
Read: 7 Best Investment option for Salaried Person
What is the SIP Calculator’s working?
SIP calculators use the compound interest formula to calculate possible returns. The calculator calculates the prospective returns while accounting for the number of times compounding is relevant. The SIP calculator also asks for the monthly contribution amount, the number of years the investment will last, and the estimated SIP return percentage.
The maturity amount and wealth to be gained from the mutual fund investments will both be calculated automatically by the online SIP calculator. The monthly investment amount for the specified tenure and rate of growth can also be determined by entering the target amount that corresponds to the investor’s financial aim.
Read: Best Index Funds to Invest in India
How is the SIP return determined?
Absolute return, annualised returns, CAGR, and XIRR can all be used to compute SIP return. CAGR, however, is the best way to predict SIP returns.
The compound annual growth rate, or CAGR, measures how much an investment grows on average each year throughout the course of the investment. Here is how to calculate CAGR:
CAGR is equal to (1/number of years or months) – 1*100 (final value / beginning value).
- The NAV at the time of withdrawal is the ending value.
- The NAV at the time of investing is the beginning value.
- The duration of the investment is a specified number of months or years.
SIP Calculation Example
Let’s take a Example
When the NAV is INR 20, Mr. Anudeep has invested INR 2,52,000 (INR 3,000 per month) in a mutual fund. The NAV is INR 50 at the time of withdrawal after seven years. We can calculate Mr. Anudeep’s SIP returns using the CAGR formula.
CAGR is equal to (ending value/starting value) divided by (1/number of years) – 1* 100.
CAGR = (((50/20) ^ (1/7)) – 1) * 100
13.98% is the compound annual growth rate.
This indicates that during the course of seven years, the investment increased by 13.98% annually. Even in terms of months, the return won’t change.
CAGR = (((50/20) ^ (12/84)) – 1) * 100
CAGR = 13.98% ~ 14%
Therefore, a $2,52,000 investment will increase to $4,29,076 in 7 years.
Advantages of SIP calculator
Here are the advantage of sip calculator-
- Results Right Away: Estimating the future worth of your investments has never been simpler. There is no need for time-consuming figure crunching. Based on your inputs, the ET Money SIP Calculator consistently produces rapid and accurate results.
- Simple to Understand and Use: You don’t need to be a math pro to estimate your investment requirements because the SIP Calculator is incredibly simple to use. Additionally, it is cost-free and unrestricted in its usage.
- Helps You Make Knowledgeable Investment Decisions: Planning your investments is essential if you are saving for a specific objective. To attain your investing goal with the least amount of trouble, use the SIP Calculator to estimate how much you need to save.
- Find the Best Contribution Options: Unlike other calculators, which may merely show you the required monthly investment amount or the potential future worth of your investments, we go much farther. In keeping with our promise to give you access to this tool, we also give you a list of funds that could be able to assist you in achieving your financial objectives.
- Adjust Your Figures for Inflation: Everything costs more over time due to inflation, and the majority of SIP calculators in India are unable to give you results that have been adjusted for inflation. Since we took care of this issue for you, all you have to do is click a button to obtain the results adjusted for inflation for your investment objectives.
SIP Calculator- FAQs
- How much money can I put into a SIP?
Answer-Although there is no maximum investment amount for a SIP, the minimum investment amount is INR 500 each month.
- SIP Calculator: What is it?
Answer-An online financial tool called a Systematic Investment Plan (SIP) calculator can assist you in figuring out the returns on your SIP investments. The calculator also provides you with the monthly investment amount required to reach your goal corpus.
- What is the SIP calculator’s formula?
Answer-With the help of this formula, you may comprehend how a SIP calculator functions. Future value, or the amount received at maturity, is determined by the formula FV = P [(1+i)n-1] * (1+i)/i. Consider an investment of Rs 2,000 every month for a period of 24 months. You anticipate an annual return of 12%. (r).
- Is the SIP calculator reliable?
Answer-Using an SBI MF SIP calculator has a number of benefits, some of which are listed below. You receive a fairly good estimate of your SIP returns from this. The real outcome could somewhat vary because mutual funds are susceptible to market risks. The manual solution of SIP calculations is rather challenging.
- Is SIP tax-exempt?
Answer-SIPs are among the best tax-saving tools since they offer significant investment returns. Under Section 80(C) of the Income Tax Act of 1961, you may deduct up to Rs. 1.5 lakh from your taxable income for investing in ELSS through SIPs. You can save up to Rs. with the 30% tax rate, which is the highest.