SIP CALCULATOR – SYSTEMATIC INVESTMENT PLAN CALCULATOR
SIP’s are just a method of investing funds and the other method being a lump sum. A SIP Calculator is a tool which helps you calculating the returns that you can benefit when establishing your funds in such investment tools. Systematic Investment is basically a process where you invest a fixed amount of money in mutual funds eventually. SIP also allows you to invest weekly, monthly or yearly.
WHAT IS A SIP CALCULATOR?
SIP calculator is a easy to use tool where a person gets an idea of the returns on their Mutual Funds Investments that they make through SIP. It is immensely turning out to be the most popular investment options for the people lately.
These SIP calculators are designed to give a approx calculation of the mutual funds investments to their respective investors. The actual returns provided by a mutual fund scheme differs depending on various factors. However, in case of exit load and expense ratio the SIP calculator does not provide any clarification (if any).
This calculator calculates the wealth gain along with expected returns for your monthly SIP investments. You will also get a rough calculation on the maturity amount of your monthly SIP which is based on a projected annual return rate.
HOW CAN SIP CALCULATOR HELP YOU?
According to several mutual fund experts, SIP’s are a more profitable mode for investing funds than lumpsum amount. It helps you to be financially disciplined by creating a habit of saving money which will help in planning your future in a better way.
A SIP Calculator online is an essential tool which shows the overall returns that you will earn after the investment period.
Other benefits of SIP calculator includes—
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Helps you to determine the amount you want to invest.
- Informs you the total amount you have invested.
- Provides an overall calculation value of the returns.
HOW DOES SIP CALCULATORS WORK?
Formula of SIP Calculators-
M = P x ({[ 1+i]^n – 1} / i) x (1 + i).
In the above formula –
- M stands for the amount you receive along maturity.
- P stands for the amount you invest at a period.
- N stands for the number of payments you made at times.
- i stands for the periodic rate of interest
Take for example you want to invest Rs. 1000 per months for 12 months at a periodic rate of interest of 12%.
Then the monthly rate of return will be 12%/12 = 1/100 = 0.01
Hence, M = 1000 X ({[1 + 0.01 ]^{12} – 1} / 0.01) x (1 + 0.01)
Which gives Rs 12,809 approximately in a year.
Therefore a organized investment plan calculator makes sure that your total savings are as per your basic requirements and financial needs.