Systematic Investment Plans are considered a way of investing in Mutual Funds. You can invest a fixed amount in a particular scheme at set intervals, like weekly, monthly, quarterly, etc., for five, 10, or 15 years. Every instalment paid to the AMC or fund house increases the value of the overall invested amount and possible returns. A simple SIP calculator makes you aware of the Mutual Funds returns.
However, the actual returns offered depend on various factors. It calculates the wealth gain and expected returns for your monthly investment. You also learn the estimated maturity amount based on a projected annual return rate.
How does it help?
According to Mutual Fund experts, SIPs are lucrative compared to Lumpsum Investments. It lets you become financially disciplined and creates a savings habit beneficial for the future. It also decides the investment amount, displays the total amount invested, and gives an estimated return value.
Formula
The SIP calculator works on a simple formula:
M = P x ({[1+i] n-1}/i) x (1+i).
Here, M is the maturity amount, P is the amount you receive at regular intervals, I is the interest rate, and N is the number of payments made. The interest rates on SIPs differ according to market conditions. It either increases or decreases, changing the estimated returns.
Advantages
Assuming no external factors affect your return upon maturity, the calculator computes the returns you can receive from your investment since there is no risk of human error. It lets you make informed investment decisions since you can forecast your investment plans and compare the outcomes.
With the calculator, you can change the tenure and investment amount to see how it impacts your returns for better profits. Unlike manual calculations, the results are accurate and not prone to human error.
How does it work?
When you start SIPs, you let the auto-debit of a fixed sum from your registered Bank Account into Mutual Funds. SIPs work as a flexible opportunity with the freedom to choose the investment amount, tenure, and frequency.
Making the best use
You should enter the variables in the given fields: SIP amount, duration, and the expected annual return rate. The SIP amount is not measured according to the capital you are willing to invest. It also calculates the risk exposure and considers the income structure, risk amount, etc.
Conclusion
You need to research before deciding to invest. There is no minimum or maximum tenure for investments. You can compare multiple return scenarios using the online tool and make the right decisions for earning decent returns. It is accessible anytime without usage limitations. You should also ensure financial, and the asset’s investment objectives are aligned, enabling you to realise your goals faster.
