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SIP | Calculator

SIP Calculator

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SIP Calculator - Systematic Investment Plan Calculator

A Systematic Investment Plan or SIP is an effective and affordable way to invest in mutual funds. With SIP, investors can make fixed, regular payments and slowly build wealth over the long term while enjoying benefits such as rupee cost averaging, diversification, compounding interest, flexibility, convenience, and professional management. Given the increasing popularity of SIPs, using a SIP Planner or SIP planning calculator is important for gaining insight into how your wealth can grow. So what exactly is an SIP Calculator, how does it work, and what benefits can it offer you? Let’s find out! 

What is a SIP Calculator?

An SIP Calculator is a financial tool which investors can use to estimate the returns on their mutual fund investments. The way it works is simple. You just need to input variables like the monthly investment amount, the investment period, and the annual expected return rate, and the mutual fund sip calculator quickly estimates and displays the future value of your investment. You can use it to experiment with different situations, understand the impact of various return rates, and plan your financial goals much better.

The main use of a SIP return calculator is to get an idea about the future value of an investment. It calculates the investment returns but does not take into account factors such as expense ratio, taxes, and exit load. 

How Can a SIP Calculator Help You?

A mutual fund sip calculator can help you in many ways:

How Does a SIP Calculator Work?

Calculating the future value of your investment manually can be tedious and time-consuming. But with an sip compounding calculator, it’s a breeze. All you’ve got to do is input your monthly investment amount, investment duration, and expected rate of return, and voila! The sip investment calculator does the rest. It instantly shows the results with a breakdown of your total investment (principal amount) and returns earned. 

An important point to note here is that the expected return rate you input is assumed to stay constant, which may not always match the market conditions. In real life, mutual fund investment returns are market-linked, meaning the maturity amount calculated based on entered returns might differ from the actual outcome. But despite this, a SIP calculator is invaluable for getting a rough estimate of your investment’s future value.

SIP Calculation Formula

The sip calculation formula is:

M = P * ({[1 + r]n – 1) / r} * (1 + r)

Where,

  • M denotes the future value of the investment
  • P denotes the monthly contribution amount
  • r represents the monthly return rate
  • n represents the total number of payments made over the investment period in months

Let’s take an example to understand how a sip compound interest calculator estimates the maturity amount. Suppose you plan to invest Rs. 8,000 per month and want to determine the value of your investment after 4 years, with an expected annual return of 10%. 

Here, we’re given that

  • P = Rs. 8,000 per month
  • n = 4*12 = 48 months
  • Expected annual rate of return = 10%

First, we must convert the annual rate from a percentage to a decimal = 10/100 = 0.1

To get the monthly return rate, we’ll divide this value by 12. So, 0.1/12 = 0.008333

Thus, r = 0.008333

Using formula M = P * ({[1 + r]n – 1) / r} * (1 + r)

M = 8000 * ({[1 + 0.008333]48 – 1} / 0.008333) * (1 + 0.008333)

M = 8000 * ((1.48933 – 1) / 0.008333) * 1.008333

M = 8000 * 58.72200 * 1.008333

M = 4,73,690

So if you invest Rs. 8,000 every month for four years at an expected 10% annual return rate, your investment will grow to approximately Rs. 4,73,690.

Fincart’s sip calculator can easily perform this calculation for you and give you an accurate estimate of your investment’s growth based on your inputs. Again, remember that the calculator assumes the expected return rate will remain constant throughout the investment duration, which may not necessarily reflect real-world market conditions. Fluctuations in the market are inevitable and actual returns of your mutual fund investment may vary.

Benefits of SIP Calculator

A MF sip calculator can prove to be a valuable tool for investors. Here are some benefits of using it:

How to Use the Fincart SIP Calculator?

Fincart’s monthly sip calculator is very easy to use! Follow these simple steps to get an estimate of your potential mutual fund investment growth:

FAQs - Mutual Fund SIP Calculator

A mutual fund sip calculator can help you in many ways:

A SIP calculator is a financial tool that allows you to calculate the future value of your mutual fund investment. You need to enter the monthly amount you plan to invest, the investment duration, and the expected return rate. Based on these inputs, the calculator will show you the estimated maturity amount.

No, SIP calculators cannot guarantee accurate future returns. To get the maturity amount, you will have to input three metrics – the investment amount, which you control, the investment duration, which you also control, and the expected return rate. The third metric is not under anyone’s control, and what you enter is only an assumed rate. The actual returns of your mutual fund investment can vary due to market volatility. If the actual returns match your expectations, then the SIP calculator will accurately reflect the growth of your investment.

The expected rate of return reflects what you assume your mutual fund investment will earn annually. There is a chance that the actual returns may differ from your expected returns, that’s why special care should be taken to use a realistic rate of return.

SIP calculators are easy to use and help you quickly estimate how much your mutual fund investment will grow based on the investment duration you want, the amount you want to contribute, and the annual returns you expect. They allow you to effectively plan your investments, visualise investment growth, and make informed decisions. You can adjust the expected rate of return to compare different types of funds, such as equity or hybrid, and see how these changes impact your investment.

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