SIP Calculator: A Tool to Forecast Estimated Returns on Your SIP Investment

Some investors may presuppose that since mutual funds invest in stocks, it is better to invest in stocks directly through a broker rather than investing in mutual funds. Other investors might find fund’s expense ratio and other investment fees as the reasons for stocks scoring a point over mutual funds. However, we would like to explain you why mutual funds are a better option than investing in individual stocks. There are many benefits involved in mutual fund investments such as high returns, diversification of the portfolio, liquidity, professional management, etc. Besides all these benefits, there is one important reason which assists in making investment in mutual funds easy and beneficial, i.e., SIP investment. What is SIP? SIP, also known as Systematic Investment Plan, is a mode of making an investment in mutual funds. An investor is required to invest a predetermined amount at regular intervals for a specific period of time while making an SIP investment. The enormous advantage of it is that even with a small amount we are able to enjoy the benefit of diversification. Because of the power of Compounding and Rupee-Cost Averaging effect, timing the market becomes irrelevant. Last but not least, with such less effort, it helps in achieving the desired goals in a defined period of time. Now, when we are well acquainted with the advantages of investing via SIP, let us figure out how we can calculate the estimated future value of our SIP. This can be done using a SIP calculator. The main rule of investing is to start investing as soon as it is possible because the effect of compounding is seen more when the tenure of investment is more. If you are planning for your future expenses and want to know how much amount you would be able to accrue after the completion of your investment tenure, you can use SIP returns calculator for that. What was the need to design this calculator? Why pre-calculation of the future value of the invested amount is beneficial? Answer to both these questions is- to make investors more wary about financial planning. Because, being an investor when you see the growth trajectory of your investment, you get more committed towards investing regularly without getting deviated from the market behavior. That means one would not require timing the market while making SIP investment. Let us understand how this SIP calculator works. SIP Calculator - Working Using an SIP planner is very easy because of its user-friendly GUI. All what you need to do is follow these three steps:

• Input the amount that you want to invest monthly in SIP.
• Now, enter the approximate assumed percentage return that you expect to amass on your monthly income. This percentage can be evaluated by looking into the past performance of the fund.
• Last step is to decide the time duration, i.e., for how long you want to continue with your investment.
After you fill out these values, you will be able to see the output containing:
• The total SIP amount invested by you.
• And, the Future value of the amount invested.

Now, the question is why you should use this calculator. Those investors who are conscious about the inflation in future would always want to have a rough idea about the amount they can accrue by the end of the investment tenure. This helps in getting a clear picture that if the money you are going to invest monthly in SIP is sufficient to meet up the investment objective or not. By now, many websites have introduced advanced SIP calculator that will assist you in determining the approximate return you can accrue post inflation. This helps in visualizing a maturity value by taking inflation into account. Investing in SIP gives your money the benefit of compounding as well as rupee-cost averaging effect, which in turn lets you invest regularly and freely without having a need to time the market. Short-term investments are prone to market volatility but long-term investment if done through SIP tends to balance the risk. Calculating the estimated future value is a good habit of having a defined plan to achieve your goals. SIP calculator will do this work for you. You can easily figure out the growth of your money in future which you are going to invest. Hence the motive of investment should be- calculate and invest.