Today a systematic investment plan is one of the most popular investment routes to build healthy investment discipline and a steady approach. The investment routes extend the flexibility to mobilize a small part of one’s investment on a regular basis to accumulate wealth through the power of compounding over time. However, individuals must follow suitable investment strategies to maximize this SIP feature. To build suitable investment strategies, individuals can utilize an MF SIP calculator to compare different investment approaches to determine which one yields the best outcome.
That said, let’s learn about the MF SIP calculator and figure out how it can help you plan investments better.
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Online SIP Calculator in a Brief
MF SIP calculator is an online financial calculator that allows users to estimate their returns on their SIP investments. Typically, the calculator weighs factors such as investment amount, investment horizon, rate of returns, and compounding frequency to determine SIP returns.
These calculators come with a built-in formula that computes the returns within a couple of seconds of entering the details of the investment plan. The investment calculator is user-centric as it comes with a simple design and can be navigated easily. Also, users do not need to possess in-depth knowledge about SIP to use the calculator. These features make the tool appealing to even those who are not tech-savvy or know everything about SIP.
Formula Used by SIP Calculator
The investment tool comes preloaded with the formula mentioned below and uses it to help determine the returns on SIP investment –
FV = P [ (1+i)^n-1 ] * (1+i)/iFV
In this case,
FV stands for the estimated amount
P stands for the principal amount
i stands for compounded rate of interest
n stands for investment tenure (in months)
r stands for rate of return
An Example of SIP and Calculation
Suppose Manish plans to build a corpus in the next 24 months. To achieve his goals, Manish decided to invest Rs. 2000 every month in mutual funds via SIP with the expectation to generate 12% on his investments annually.
Using the SIP formula we see –
FV = P [ (1+i)^n-1 ] * (1+i)/iFV
FV = 2000 * [(1+0.01) ^24 – 1] * (1+0.01)/0.01
Note: The compounded interest rate is 0.01
(i = r/100/12)
At the end of the investment period, i.e., 24 months, the SIP would generate Rs. 54,486. Notably, individuals can use the formula and calculate the interest manually. However, the process would be quite lengthy as its calculation has multiple steps. This would be time-consuming and more likely to have calculation errors due to silly mistakes. On the other hand, by using the SIP calculator, individuals can eliminate lengthy calculations and check results in a few seconds. In addition, it produces accurate outcomes, which help make accurate estimates and plan investments accordingly.
Steps to Use the SIP Calculator
The MF SIP calculator is easy to use and can be accessed for free. By following these simple steps one can use the online SIP calculator –
Step 1: Look for a reliable investment or financial website
Step 2: Navigate to the investment plan calculators
Step 3: Select the SIP calculator and open it
Step 4: Enter investment details
Step 5: Enter investment frequency
Once all the required fields are filled the online calculator will display the estimated returns and maturity amount within a couple of seconds. In case the outcome does not match their desired amount, the users can readjust the inputs and calculate again. This will provide them with the required insights into which combination of the investment amount, tenure, and compounding frequency can provide the desired outcome. Notably, having a clear idea about one’s financial goals and investment requirements allows individuals to understand whether the outcome would meet their expectations.
Features Online SIP Calculator
Key features and associated benefits of the SIP Calculator include –
Free access and a simple interface
Online SIP calculator has a smart design that is user-friendly and can be used without any hassles. To use the calculator individuals just need to enter a few key details in designated fields to determine the estimated returns and maturity. Individuals can access the tool online and use it for free to compute their SIP mutual fund returns.
Saves time
Since the online investment tool eliminates the need to compute estimated mutual fund returns via SIP it eliminates the need to calculate the same manually. This makes the process faster, helping investors save time. In turn, it allows users to spend more time comparing different SIP approaches and plan their investments accordingly.
Facilitates proper financial planning
SIP calculators are efficient in helping plan finances as per their requirements. For instance, the tool allows users to readjust investment variables such as investment period, principal amount, compounding frequency, etc. multiple times for free. This allows users to determine which combination works best in their interest and could generate inflation-adjusted returns.
In addition to helping plan one’s finances and investments better, an online SIP calculator helps understand how an individual’s one time investment plan will affect one’s current financial standing. In other words, it helps determine whether the monthly SIP amount will burden the monthly budget or not. Having such an insight helps avoid financial strain.
Tips to make the most of returns via SIP
These tips can help make the most of SIP returns and boost earnings –
Tip 1: Individuals can increase the SIP amount they plan to put in mutual funds or other investments through the route.
Tip 2: They can opt for a longer investment horizon to maximize the impact of the Power of Compounding on SIP returns.
Tip 3: Individuals should park their money into high-yielding schemes and funds to accumulate wealth faster.
Tip 4: The SIP calculator can help users understand which combination of investment variables would work best for them. It will also help analyze the impact of compounding frequency on returns more clearly.
These tips can help one plan investments via SIP more efficiently and align the strategies with their goals. However, to ensure their plan helps them meet their financial goal, individuals must check and compare the features of investment options and assess their performance. They should also make sure to reallocate their portfolio resources to generate steady returns throughout and to do this, they can take the help of their SIP calculator.