When you invest in SIP, money is invested at regular intervals into a mutual fund scheme. With the help of an SIP calculator, you can plan your investments to align with your long term and short-term goals. The free calculator is readily available online and can be used before you start your investment in mutual funds.
How does an SIP calculator work?
Your plan to invest in SIP will give you a convenient way to build a corpus aligned to your short term and long-term goals. A small amount invested each month in an SIP can build a large corpus due to the power of compounding. This simply means that the interest on your investments is calculated on a compound basis each month when you deposit a fresh amount it is compounded again. This is a very long process if you are using a calculator or even on an excel sheet.
This problem of computing is solved when you use a free SIP calculator available online to help you understand how much you can hope to accumulate in a specified number of years as you invest in SIP.
To process the calculation of your investment, the calculator requires some details like the target amount you want to achieve to fund your goal, the regularity in which you will invest, the number of years you want to stay invested, and the assumed percentage of returns on your investment The SIP calculator will then generate the amount that you should invest in order to reach your goals.
For example, say you want to invest in SIP to build a corpus of Rs 1 crore for your child’s education. Let us say your child is a year old and you expect her to reach college at the age of 18. Then you have about 17 years left to build up the corpus. Using an SIP calculator, you can find out how much amount you need to invest in SIP per month to reach your target amount of Rs 1 crore in 17 years.
Benefits of using an SIP calculator -
Using an SIP calculator has an important place in your plan to invest in SIP. Given below are a few points on how an SIP calculator is beneficial.
The calculator projects the future value of your investments so that you can have a properly defined plan to achieve your goals or to realign them to fit in with your priorities.The calculator helps you decide on how much you need to invest in SIP per month to reach your goals.Helps you manage your time by eliminating cumbersome lengthy calculations as it gives you the results at the tips of your fingers.Use an SIP calculator before you plan to invest in SIP in mutual funds. Post this, a mutual fund distributor or a financial advisor can guide you on choosing the best mutual funds aligned to your investor profile.
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