What is SIP?
SIP stands for Systematic Investment Plan. It is an investment plan in mutual funds where an individual can invest the fixed amount every month, quarter, or year in the Mutual Fund scheme. The amount of installment can be as little as INR 500 per month to as high as an individual wants.
What is SIP Calculator?
SIP calculator is a metric that allows investors and individuals to estimate the mutual fund returns on the investments made using the SIP (Systematic Investment Plan). In other words, SIP is an online tool that allows a user to calculate the SIP amount to reach their financial goals on the basis of an expected annual return.
How does a mutual fund SIP calculator work?
All the SIP calculators are designed to give investors and individuals a heads up for their mutual fund investments. The returns on the mutual funds’ investments are different based on the mutual funds’ investments scheme. The mutual fund SIP calculator does not include the expense ratio and exit load ratio of the investments if any.
How to Use the SIP (Systematic Investment Plan) Return Calculator?
The SIP calculation is easy to use and is highly convenient for beginners and new investors to calculate the return on mutual fund investment. You are required to follow the following steps to get an estimate of the return on your investment in mutual fund schemes made using the SIPs:
Step 1: Choose the frequency of your SIP (Systematic Investment Plan).
Step 2: Enter the amount that you would like to invest in a mutual fund through SIP.
Step 3: Enter the tenure of the mutual fund through SIP.
Enter the expected rate of return on the investment.
Once you follow all the steps mentioned above, the SIP calculator will calculate the return and display the amount accumulated at the end of the tenure of the SIP. You will see the comparison of the mutual fund investments through SIPs and fixed deposits. SIP calculator allows you to make wise and calculative decisions that help you make good investments in a mutual fund scheme.
How does the SIP Calculator work?
Using the SIP calculator is very easy and convenient to calculate the returns on mutual funds investments. You are required to enter several metrics to find the exact return, such as the investment amount, duration of the investment, frequency of the investment, and the expected returns. The SIP calculator is designed on the compound interest formula. The compound interest is very powerful in accumulating and compounding the mutual fund returns. The SIP calculator shows the difference between the mutual fund returns with the fixed deposits.
SIP Calculator Formula
The formula used in the SIP calculator to calculate the expected returns is as follows:
FV = P [ (1+i) ^ n-1] * (1+i) / i
Here, FV = Future value or the amount you will receive at the time of maturity of the investment.
P = Principal amount you invested through SIP
i = Compounded rate of return
r = Expected rate of return
n = Investment duration in months
Let us assume that you want to invest INR 2,000 per month for 24 months. You expect an annual rate of return of 12%.
i = r / 100 / 12 or 0/01.
FV = 2000 * [ (1 + 0.01) ^ 24-1] * (1+0.01) / 0.01.
After calculation, you will receive INR 54,486 at maturity.
Start Investing in SIP mutual funds with SIP Calculator:
Investing in mutual funds through SIP is one of the best investment options. It is a systematic method where you can decide your monthly investment, tenure of the investment, and frequency. With the SIP calculator, you can calculate the estimated returns on the investment that allows you to make a wise decision as per your income, requirements, and preferences. So, start investing in the SIP mutual funds now through INDmoney.
Benefits of using INDMoney’s SIP Return calculator:
Power of compounding
SIP allows you to compound your investments. Compounding generates when your returns on the investments generate more returns. It is a simple and significant concept in investing. SIP helps you to invest a regular amount every month in a mutual fund scheme that generates more returns.
Low initial investment
With INDmoney’s SIP calculator, you can invest any amount you like as per your financial situation. You can invest as low as INR 500 per month and as high as you want. You can start with a low investment to see how your investments earn returns in the beginning and can gradually increase the amount.
Another essential point is that SIP is both easy and convenient through INDmoney’s application. You are not required to keep track of market trends, don't have to research, and analyze the market situations for investments, unlike other investment options. You just have to pick a good fund and start your investments through SIP. You will receive notifications and updates about the investment in the app itself.
- What is an SIP calculator?
SIP calculator is a metric that allows investors and individuals to estimate the mutual fund returns on the investments made using the SIP (Systematic Investment Plan).
- How does the SIP calculator work?
Using the SIP calculator is very easy and convenient to calculate the returns on mutual funds investments. You are required to enter several metrics to find the exact return, such as the investment amount, duration of the investment, frequency of the investment, and the expected returns.
- What is the goal of the SIP calculator?
The goal of the SIP calculator is to determine the monthly SIP investments in the mutual funds.
- What are the benefits of SIP?
- Small money can be invested: Investors can start a SIP even Rs 500 in mutual funds, which is not possible in case you want to invest in shares. Shares of some of the listed companies trade at higher prices, which can't be owned by small investing directly with small amounts.
- Disciplined investing: SIP instil discipline into investors by committing to invest a predefined amount at regular intervals which is essential for building wealth in the long-term.
- No need to worry about market volatility: Investors receive more units when the NAV of a mutual funds fall and less units when NAV of mutual funds rise. Therefore, over a long period of time the cost of units to investors will be significantly lower despite ups and downs. This phenomenon is called Rupee cost averaging.
- Flexibility: Investors have the flexibility to decide the SIP amount, period and interval of SIP as per their convenience.
- Offers diversification at small investment: Investors can't diversify their portfolio with small investment surplus. But with mutual funds, they can get a diversified portfolio, even with investment of Rs 500.
- Professional management of investments: Mutual funds are managed by knowledgeable and disciplined fund managers. Investors generally don't have in-depth knowledge of investing.
- Power of compounding: Investors can stay invested in mutual funds for a longer period of time. Compounding is a phenomenon wherein over a period of time returns get added to corpus and this in return generates more return. This phenomenon leads to an exponential growth of corpus.
- What if I miss my SIP dates or don’t have sufficient money in my bank account?
With auto-debit feature, firstly you don’t need to remember the debit dates as the bank account will get debited automatically on the date which you have selected for SIP. However, just in case for whatever reason the funds are not available in the bank account, you will miss one SIP. There is no penalty or any fee. Your SIP account remains active even if you miss one SIP date but after multiple misses, it gets cancelled.