SIP calculator is a tool which allows investors to estimate the return on mutual fund investments through SIP. Axis Mutual Fund SIP Calculator will help you calculate the expected returns for your monthly SIP investment.
I know my goal amount
I want to start small
SIP stands for Systematic Investment Plan . SIP is a payment process where the mutual fund investor invests a predetermined amount at regular intervals (usually on a fixed date of every month). SIP is the opposite of the traditional lumpsum investment option, where an individual makes the entire mutual fund investment right at the beginning of the investment cycle. While opting for mutual fund SIP, all an investor needs to do is instruct his/her bank following which, every month on a fixed date a predetermined amount is debited from their savings account and electronically transferred to the mutual fund. As an investor, if you have long term goals like retirement planning or securing the future of your children, you may start a mutual fund SIP and continue investing for the long run. Those who start a mutual fund SIP also stand a chance of benefiting from the power of compounding and rupee cost averaging. The term SIP has become synonymous with mutual funds. A lot of people confuse SIP and mutual funds to be the same, but they aren’t. SIP is easy and hassle free method to continue investing in mutual funds without having to personally visit the fund house. An individual who is KYC compliant can start a mutual fund SIP from the comfort of their laptop or even a smartphone.
SIP calculator is designed to calculate the estimated capital gains and expected returns from the investor’s monthly SIP investment. A SIP calculator is an online tool that gives investors a fair idea of the capital gains they might receive on their mutual fund investments made via a Systematic Investment Plan. A lot of retail investors are opting for investing in mutual funds via SIP and it is quite a popular mode of investment among young investors as well. The function of a mutual fund SIP calculator is to give the investor an estimated figure in which their mutual fund investments might fetch over a period of time. However, people should bear in mind that the return value showcased by a SIP calculator may vary from the actual returns offered by a mutual fund scheme they have invested in. Like we stated earlier, the maturity amount stated by the SIP calculator is a rough estimate based on an envisioned annual interest rate.
To understand how the SIP calculator works, let us give you an example to understand how a SIP calculator works. But before that, let us understand the formula used by an SIP calculator to calculate returns:
PR = Potential Returns
P = SIP amount
i = compound interest return rate
This formula may be looking a bit complicated, but to help you understand let us tell you that an SIP calculator uses 4 simple steps to determine your future returns:
What is your investment amount?
For how many months do you plan to invest in mutual funds via SIP?
Number of SIPs (if any) already paid.
What is the interest rate you expect the mutual fund scheme to give?
- Easy to use: The SIP calculator offered by all fund houses is very easy to use. You need to put in very few details in order for the calculator to help you understand how much capital gains you can potentially earn from your investments.
- Helps with financial planning: The SIP calculator is an easy and fast way for anyone to start their mutual fund investment. It doesn’t take too long for the calculator to give you a rough estimate value once you enter all the necessary details. It helps you understand how much principal amount you need to have in hand to start a mutual fund SIP.
- Anyone can use this calculator: The SIP calculator works in the favour of everyone. Anyone who wants to understand the estimated value they should be expecting from their SIP investments in mutual funds can use the SIP calculator.
- Rupee cost averaging: Since you are investing a defined amount in the mutual fund every month via SIP, you may benefit from rupee cost averaging. When the NAV of the fund is low, investors will be allotted more units. Similarly, when the NAV of the fund is high investors are allotted more units.
- Inculcate the habit of investing regularly: If you know how much you need to invest regularly to get to your goal, you may start investing regularly in mutual funds via SIP and this may inculcate a good habit of regular investing in an investor. To remain invested for the long run, one needs to give their investment a disciplinary approach and starting a mutual fund SIP might be helpful.