Investing your money wisely is a crucial aspect of financial planning. With the availability of various investment options, it becomes difficult to choose the right investment avenue that suits your financial goals. To help you select the best investment option and calculate its returns, there are helpful tools like SIP calculator online. SIP or Systematic Investment Plan is an investment method that works on the principle of regular investments.
What is a SIP Calculator?
SIP calculator online is a tool that helps investors calculate the returns on their investment in mutual funds based on their monthly investments, the investment period, and the expected rate of return. SIP calculator helps investors create an investment plan by estimating the future value of their investment over a specific period. It also helps them understand the potential returns from their investments and make informed decisions before investing their hard-earned money.
SIP calculator works on simple math principles that help investors calculate the gains from their mutual fund investments. All the investors need to do is enter the monthly investment amount, the investment tenure, and the expected rate of return. The calculator generates a detailed report that comprises the fund value, expected returns, and compounded growth of their investment.
How does SIP Calculator work?
SIP Calculator is an online tool that makes use of a mathematical formula to calculate the returns on your investment. The formula used is based on the Principle of Compound Interest. To put it simply, compound interest calculates the interest on both the principal amount and the interest earned previously. Therefore, the longer the investment period you choose, the higher the returns and compounding benefits.
For instance, let’s say you invest Rs. 5,000 in an Equity Linked Savings Scheme (ELSS) mutual fund using the SIP method for a period of five years. Assume the expected rate of return on the investment is 14%. Based on these assumptions, the SIP calculator will estimate the future value of your investment at the end of five years to be Rs. 4,36,004. The potential earnings from this investment would be Rs. 1,36,004.
The calculator also provides a graphical representation of the investment growth over the investment period, which makes it visually appealing and easy to understand. SIP Calculator is an excellent tool for investors who are new to mutual fund investments and are not entirely sure about investment strategies.
Why is SIP Calculator important?
SIP calculator is an essential tool that helps investors create a realistic investment plan based on their financial goals. It is essential to know how much you have to invest every month to achieve your financial objectives. SIP calculator helps you determine the ideal investment amount based on your monthly budget, expected returns, and investment tenure.
SIP calculator is especially useful when investing in ELSS mutual funds. ELSS is a tax-saving product that offers tax deductions under Section 80C of the Income Tax Act. ELSS is an ideal choice for investors who want to create long-term wealth while saving on their tax liability.
SIP Calculator also helps investors understand the impact of small changes in investment parameters on the final returns. For instance, if you invest Rs. 5,000 every month for ten years with an expected rate of return of 12%, you will earn an estimated Rs. 11,61,695 at the end of the investment tenure. However, if you increase the monthly investment amount to Rs. 7,000, the estimated returns will be Rs. 16,26,374.
SIP calculator also helps investors compare the gains from investing in different mutual fund schemes and choose the best investment options available. Investors can compare mutual funds from different fund houses to find the best investment options based on their investment objectives and risk profile.
In conclusion, SIP Calculator is an ideal tool for investors who want to make informed investment decisions and create a realistic investment plan. It is important to choose your investment option wisely and keep a watch on it regularly to reap maximum benefits. SIP Calculator serves as a useful investment tool that helps investors make informed investment decisions based on their financial goals and investment objectives.
Investing in the Indian financial market carries a certain level of risk, and potential investors should gauge all the pros and cons of trading before investing their money. We do not endorse any particular mutual fund or investment scheme and advise investors to conduct thorough research and consult financial advisors before investing. The calculation of potential returns is an estimation and can vary depending on the market conditions.
Hey, this is Johny Sehgal. I am the owner and caretaker at Finance Jungle. I completed my education in BSC and now heading towards the digital marketing industry. I usually have interests in reading, playing games and watching movies. I also love to write content based on quality information. The main motive of mine is to provide the top and best quality information to my readers. Finance Jungle is the blog for the same.