Mutual Fund SIP Calculator: Here’s How You Can Plan Your Investments Using This Tool

The right investment plan is key to a safer and happier future. It grants you the freedom to operate with minimal financial stress. You don’t necessarily need to be well versed with the jargon or humdrum of the financial world. All you need to analyze is your personal financial situation, along with a few tips to help you plan your investment better. A SIP, or Systematic Investment Plan, is an ideal solution for you to assure yourself that your funds would be deployed in the right way. 

What is a SIP?

A SIP is a popular standout option amongst investment methods in mutual funds. It offers investors a chance to put aside a fixed amount of funds at regular interims (week after week, month to month, or quarterly) with a goal to produce capital appreciation in the extended run. A SIP investment is a routine – involving investing a predictable rupee sum in a mutual fund scheme at normal interims over a set timeframe. What this prompts is sound, time-tested judgment: you end up purchasing to a greater amount when the cost is low and purchasing less of the equivalent mutual fund scheme when the cost is high. 

What is SIP calculator? 

A SIP calculator determines the returns you’re likely to generate over the duration of your SIP. Simply enter the sum you wish to contribute each month and pick the number of years you wish to proceed with the investment. The SIP calculator will consequently figure the measure of return. 

A SIP loosens up the inescapable requirement for investors to time the market. But despite its seemingly straightforward and convenient nature, it can get challenging getting down to the details before you make a SIP investment. There are multiple factors to look at – determining the quantum of investment, its frequency, and the returns you may generate. Fortunately, tools like SIP calculators prove to be a boon in such scenarios. They simplify a large part of the pre-SIP decision making process, apart from offering a host of other benefits:

#1 – A SIP calculator helps you set specific and realistic goals 

Managing finances and investment plans can be an excruciating task. But it doesn’t have to be. A mutual fund SIP calculator does away with a significant portion of manual work (and therefore, stress) from the job. It assists in setting more realistic and achievable goals for the future. Whether you are planning for a comfortable retirement or you have some big future goals, most dreams can be turned into a reality if your investments are planned with a SIP calculator.

#2 – You can discipline your finances

A SIP calculator helps you determine the funds you’d need to invest every month to get to your financial goals. Such clarity is essential if you’re looking to plan your earnings, expenses and more. You can then formulate a systematic way to divert money to your investments every month. It’s a more convenient method to strategize on long-lasting and seemingly troublesome goals, especially those that would otherwise seem unachievable if you plan on investing in an unplanned manner.

#3 – It offers the advantages of 2 critical financial concepts

A SIP works by taking advantage of two financial concepts – Rupee Cost Averaging and the Power of Compounding.

RUPEE COST AVERAGING: Rather than attempting to time the market, an investor can elevate their chances of profits by averaging the cost of their investments. A SIP works by investing at regular intervals across market cycles. Investors can therefore profit by getting the chance to purchase more units of their assets at lower prices. The result? Higher potential gains.

POWER OF COMPOUNDING: Albert Einstein famously said, ‘compound interest is the eighth miracle of the world’. The concept of compounding is fairly simple – the earlier you begin, the more you stand to gain since you generate returns on your returns. 

#4 – It is easy and simple to screen 

You don’t need to put a hold on your timetable to check your investments. A SIP calculator makes it hassle-free to check the viability of your financial goals and their underlying plan with seconds. 

#5 – It highlights the benefits of beginning early 

An ideal way to achieving your financial goals is to begin early and make regular investments. A SIP calculator makes it easy to observe how, with SIPs, the base sum required to begin an investment is low, while the longer-term returns remain high. It’s just the data you need to begin investing early.

Using a SIP calculator and making investment plans is now only a matter of seconds. At its core, a SIP is an ordinary, programmed technique for investing – one that large numbers of investors rely on. The fixed recurrence of investment loosens up the inescapable requirement for investors to time the market – a liberation you’re likely to thoroughly enjoy.