SIP Calculator - Calculate SIP Returns
More people have started investing in a systematic investment plan in recent years, mostly known as SIP. To make an informed choice, check your investment strategy using the SIP calculator. The tool will help you predict the result to aid you in investing in the right SIP to get better financial returns. Let us find out the best use of the SIP calculator and everything else you need to know about it- ...Read More
: 1The assumed rate of return (4% p.a. and 8% p.a.) shown in the illustrative example are not guaranteed and they are not the upper or lower limits of what you might get back as the value of your policy depends on a number of factors including future investment performance | The amount shown is for 30-year-old healthy male, 15 years premium payment term, 30 years policy term with Max Life Online Saving Plan (Unit Linked Non Participating Individual Life Insurance Plan | Life Insurance is available in this product)
What is a SIP Calculator?
A SIP calculator comes in handy to predict the returns you’ll receive upon investing in a mutual fund. It helps in various aspects such as calculating the accurate results, choosing the right plan, and making you financially independent as an investor.
With a SIP calculator, you can know which plans will benefit you the most in the longer or shorter run. With various plans available in the market, it’s best to be informed before deciding to get the benefits.
SIP Calculation Formula
The SIP calculation is crucial before investing. You will have to enter the figures, and the result will help you compute a better strategy about how much money to invest and whether you will receive the profits you desire. The SIP calculation uses this formula-
FV = P × ((1 + r)n - 1) / r) × (1 + r)
Here’s what the formula stands for-
FV- Maturity amount
P- SIP amount you’ll invest
n- investment duration
r- expected return rate
Suppose you invest around Rs. 5,000 per month for the next 24 months. Now, you expect a 12% return annually; here’s how you can calculate it.
FV = 5000 X ((1+0.01)24 – 1)/0.01) X (1+0.01)The ‘r’ is 0.01 since the expected rate of return is 12% per annum, which means 1% per month.
The maturity amount approximately would be INR 1,36,216
Invested Amount – INR 1,20,000.
Returns approximately– INR 16216
How Does the SIP Calculator Work?
SIP calculator is a tool to estimate a mutual fund’s maturity amount. However, there are two different types of SIP calculators- The lumpsum SIP calculator and the SIP calculator.
You will have to enter your investment amount, frequency, investment duration, and expected returns to know your gains. You must know that the SIP results are ascertained based on compound interest. Your SIP can start from just Rs. 500 to Rs. 10,000 depending upon how much you want to invest.
How Does a SIP Return Calculator Help You?
A SIP return calculator will help you make a well informed decision in terms of investment. With the different SIP types and plans in the market, investors might get confused..
A SIP calculator can calculate the exact amount you’ll receive if you follow your investment strategy. Let’s assume that there are no external risk factors involved that may affect your investment return, and you can get the correct estimate of SIP maturity.
Suppose you plan to buy a house in three years, for which you need to save at least INR 10 Lakhs. You can invest around Rs. 25,000 per month. You expect around a 12% interest rate annually for the next three years.
Upon calculation, you will know that the principal amount invested is Rs. 9,00,000. Your estimated return approximately will be Rs. 1,87,691, and in total approximate return, will be Rs. 10,87,691. Now you can decide if this particular amount is correct to invest.
Advantages of Using the Systematic Investment Plan (SIP) Calculator
SIP calculator is instrumental for various reasons, and here are the major advantages of using the Systematic Investment Plan Calculator-
Enter your investment amount, expected interest rate, and plan tenure to get your total maturity amount. We have already mentioned the formula above that a SIP Calculator use t0 get the results
Balance Your Alternate Investment Plans Accordingly
Once you get the idea of how much money you can invest and the returns you will receive, you can balance the outflow of your money accordingly. Many investors put their money in different plans such as trading, real estate, mutual funds, etc. Once you calculate your maturity amount through the SIP calculator, you can allocate your investment to other investment plans accordingly.
- Easy to use and provides results quickly
- Helpful in selecting the right SIP
- Calculate your maturity amount for ideal scenarios
What Is SIP?
A Systematic Investment Plan or SIP is offered by mutual funds to encourage investors to invest in a disciplined and distributed manner. By investing in a SIP, investors can invest a particular amount every month for a fixed period. The investment mentioned above can range as low as Rs. 500 to Rs. 20,000 and above depending upon the investor. The SIP offers long-term benefits because of the return rate and is not subjected to market dynamics - all thanks to the concept of averaging out.
Benefits of investing in SIP-
- Investing in a SIP will help you become more financially stable in the long run and make it easier to achieve your goals.
- You can start investing in SIP as early as you want to grow your corpus.
- With the compounding strategy, you will get an opportunity to grow your investments.
What Are the Types of SIPs?
Investment in SIP can bring discipline by building healthy investment habits in investors. A SIP calculator is important as various SIPs are available in the market for investors to choose from. Take a look-
In this SIP, you can invest in a plan of your own choice for a fixed tenure which can range from 5 years to 20 years, depending on your requirements. Here, investors choose not to enter the end date in the mandate making it a perpetual SIP. The investor can redeem the amount at maturity and achieve the goals set in the beginning.
In Top-up SIP, you can increase the SIP amount and get the advantage of investing in top-performing mutual funds schemes. You can achieve your goals early and increase your corpus money with the increasing investment amount.
As the name suggests, you can increase or decrease the amount per your choice or market volatility. You can also skip paying instalments in case your financial situation is unstable. Also, you can deposit extra when your financial status gets stable, and you can cover up the losses. In a flexible SIP, you get the flexibility to change the amount before 7 days from the deposit date of your SIP investment.
You can set a trigger for your SIP by setting a particular amount to be withdrawn from the account. Set an event, date, and index level to trigger the SIP investment. Though it is advised not to set a trigger, it may create a problem if you ever struggle financially. If you are just a beginner, invest in a long term tenor and refrain from investing in Trigger SIP as it is for experienced investors possessing knowledge of the investment market.
How to Invest in SIP?
Knowing which SIP to invest in and how much to invest is crucial. SIP is a disciplined investing method to grow money in the long term. Till December 2021, around 19.5 million SIPs have been registered. Here’s how you can invest in a SIP-
Select a SIP and decide the amount you want to invest. Make your financial plan, and select the plan accordingly. For example- if your goal is to invest long term, you can check equity funds. Check the past performance and the benefits that you will get. Select the date of SIP of depositing the fund each month. Set a reasonable goal that is equally sustainable. Here are the steps to invest in SIPs-
- Visit the website of your preferred SIP
- Create your account and finish the E-KYC
- Read all the rules and regulations
- Set up your monthly payment plan
- Now kick-start your SIP.
- Never stop a SIP in between.
- Keep a check on your fund and be committed to your goal.
- If your income is increasing, increase your investment amount as well.
- Create a goal for your SIP as it will motivate you to save money.
Other Investment Plans Which Provide Good Returns
It’s best to invest in a plan without any lock-in period, as you can dabble in it without losing out on your money. The motive of investing is to save money and get higher returns. There may be numerous reasons you are investing; it could be for a house, wedding, education or repaying a loan. Therefore, you need to be smart and aware.
Benefits of investment-
- Investing will help you improve your finances
- You can plan your money more efficiently
- You can easily prioritize your expenses and decrease your liabilities
- You can let go of debts and lead a stable life
- You will be more prepared for emergencies
- You will be more independent financially
Here are the best investment plans for you to look into-
Gold is the oldest form of investment for Indians, as every household has some other gold possessions. You can invest in gold in three ways- via Exchange Traded Funds, Physical forms and Sovereign Gold Bonds.
2. RBI Bonds
The taxable bonds have a tenure of 6years and give a 8 percent interest rate. There is zero credit risk as the RBI issues the bonds. If you’re looking for better returns and a nomination facility, RBI Bond is the safest option.
3. Fixed Deposit
Considering it one of the safest options, most investors prefer to invest in SIP. There are various benefits of investing in FD, such as fixed and higher returns, compounding benefits, and zero effect of market fluctuations. There are cumulative and non-cumulative investment options for investors. Fixed Deposit provides financial stability and easy renewals.
4. Mutual Funds
Mutual funds are the ideal investment plan for individuals new at investing, providing moderate to high returns on investment. With their knowledge and skills, a fund manager assists you in selecting better plans, exemptions from wealth taxes, and transparent investments. Though in mutual funds, the returns depend on the market. There are two types of mutual funds- Equity and Debt mutual funds.
5. Unit Linked Insurance Plans
ULIP is one of the favourites among investors as it offers tax exemption and dual benefits. However, there’s a lock-in period of 5 years where one part is directed towards the insurance coverage. ULIP is flexible as you can invest according to your capacity; you can gain maximum benefits, and the maturity is tax-free.
On An Ending Note
SIPs are a beneficial way to grow your corpus for future purposes, and a SIP calculator will help you make the correct investment decision. You can use a SIP calculator and check your strategy accordingly before choosing a plan to invest in.
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