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How to Earn Better Returns through SIP with the SIP Calculator?

by Dishika Baheti
Posted: Aug 29, 2018

It is easy to calculate the returns through a mathematical formula for a lumpsum investment, but when the amount is invested every month, the calculations become perplexed. SIP Calculator is a modern tool which can stimulate the whole process of SIP investment. To calculate the returns of the SIP, one needs to make a lot of calculation and spend a lot of time to determine the returns one can gather and earn after a known tenure. To simply this process, a tool has been developed which can allow the investor to easily know the expected returns that will be available for redemption.

What Is SIP?

Systematic Investment Plan or SIP is the most convenient method of investment in which a fixed amount is invested periodically in the mutual fund that has been selected by the investor. The periodicity can be monthly, quarterly or yearly as per the convenience of the investor. It is advantageous compared to any other mode of investment because of its two attributes: rupee cost averaging and the power of compounding.

How Does the SIP Calculator Works?

The SIP Calculator allows the investor to know the expected amount that will be available after the SIP investment of known tenure. It requires three details regarding investment and the rest of the calculation is done by the SIP return calculator. The details required by the tool are:

1. SIP Amount: It is the amount in Rs that the investor will be investing in the selected mutual fund every month through a Systematic Investment Plan.

2. Time Horizon: It is the time period in years for which the investor will be investing the selected amount in mutual fund through SIP.

3. Rate of Return: It is the annualised return that can be expected from the selected mutual fund to provide. It is measured in percentage.

After inserting the details as mentioned above, the calculator works on the formula of compound interest and displays the expected amount that will be available to the investor for redemption.

What Are the Benefits of SIP Calculator?

• Smooth Planning: SIP calculator can help the investor to plan the SIP investment to achieve the financial goal within the comfort zone and financial status of the investor. A very complex calculation is easily done within few clicks through SIP calculator.

• Time Efficiency: In a fast-paced life, where time is considered one of the most valuable assets, SIP calculator works as a blessing and does multiple calculations within no time. It also separates the amount invested with amount gained, which saves time further to choose the SIP investment.

• Accuracy: SIP Calculator provides the accurate results according to the details entered. The manual calculation can have errors due to the complexity of calculations. Also, the investors with the non-financial background can predict the gains through SIP investment.

Example

Suppose, if an investor wants to calculate the expected amount through SIP investment of Rs 5,000 per month for 10 years at the annualised rate of 15%, he needs to enter the amount in the SIP amount section the tenure of 10 years in the time horizon section and the rate in the expected return block. The SIP calculator will display the invested amount at Rs 6 lac and the expected amount as Rs 13.9 lac with a wealth gain of Rs 7.9 lac.

The SIP calculator, also known as SIP return calculator or return calculator, is a handy tool which can be accessed by any investor free of cost. It is a handy tool which is specifically designed to ease out the complexity of SIP investment. It allows the investor to determine the amount that needs to be invested in fulfilling the particular financial goal.

Read the article for the details of the SIP calculator and its benefits along with an example.

Dishika is well-versed with the ups and downs of the financial market and has published articles on mutual fund and SIP. She is associated with MySIPonline.com, which is an AMFI registered mutual fund company.