Customisable investment is the buzzword for investment. It is unique to investors according to their distinct goals, risk appetite, and investment trends. The financial world prioritises the investors’ demands these days. Therefore, new investment modes offering higher returns are of the essence to meet their demands. That is where SIP investment comes in. Online tools like the SIP calculator facilitate easier investment decision-making. Let’s see how it works and how it benefits the investors.
Understanding the SIP Basics
Before understanding the benefits of using an online SIP calculator, one must first have clarity about the concept of SIP. Mutual funds allocate the investor’s money to market instruments and generate returns. While planning to invest in mutual funds, one would not want to make a massive investment initially. An investor would like to start investing in mutual funds with a small investment rather than putting a huge amount at risk.
With SIP, one can invest in a mutual fund without investing a large lump sum upfront. SIP investment allows investors to make small investments in mutual funds at regular intervals. The investment in a mutual fund increases with each payment, based on which they earn interest and get the advantage of compounding interest. Staying invested in a mutual fund for a long time generates good returns and builds wealth. Investors are free to choose a monthly SIP investment amount and payment frequency according to their monthly budget. Moreover, SIP investment neither needs a Demat Account nor involves rigorous documentation.
What Does an Online SIP Calculator Do?
People invest in SIPs for several reasons, the major one being the ability to invest in mutual funds in small amounts gradually instead of making one lump sum payment. Over time, SIP generates higher rewards with minimal market risk involved. An online SIP calculator computes potential earnings from the investment at maturity, according to which investors can plan their finances and choose an appropriate investment amount and SIP frequency.
Moreover, understanding the concept of SIP is easier for beginners. SIP also instils financial discipline in investors and encourages them to start investing and saving diligently. SIP investments are highly flexible, too, as investors can increase the SIP investment amount according to their financial situation.
How to Use a Mutual Fund SIP Calculator?
Using a mutual fund SIP calculator, investors can calculate the approximate value of the amount they must invest at regular intervals for a particular period and the returns that it will generate. It involves entering the accumulated amount, investment period, and return rate in the calculator to get a clear estimate of the total earnings at maturity. These are the steps to use an online SIP calculator:
- Giving an approximate monthly amount an investor can pay at regular intervals to invest in SIP. The minimum amount can be as small as Rs 500 per
- The tool calculates the returns based on the returns rate of the particular mutual fund scheme.
- An analysis of the fund’s track record helps derive the possible rate of returns.
SIP calculators are easily available online at the websites of most fund houses. Aspiring investors can use the calculator for free and explore various options based on their investment amount, period, and risk appetite.
Benefits of Using an Online SIP Calculator
The SIP calculator makes it easier to choose an investment plan best suited to an investor’s investment goals. Here are a few main advantages of using the tool:
- Accuracy and Speed: Online SIP calculators use complex mathematical algorithms to calculate returns, considering factors like investment amount, tenure, expected rate of return, and frequency of investment. This ensures accurate and quick results, helping investors make informed decisions promptly.
- Easy Comparison: SIP calculators allow you to compare the potential returns of different investment amounts and durations. By adjusting these variables, you can see how they impact your overall returns, enabling you to choose the best-suited SIP for your financial goals.
- Financial Goal Planning: Whether you are saving for your child’s education, your own retirement, or any other financial goal, an SIP calculator helps you determine how much you need to invest regularly to reach your target. It aligns your investment plan with your specific financial objectives.
- No Manual Calculations: An online SIP calculator eliminates the need for manual calculations, saving time and effort. It ensures accuracy in results, reducing the possibility of errors in computing potential returns.
- Quick and Easy Calculation: Another benefit of an online calculator is that it is extremely easy to use without any financial or technical know-how. Even an average investor can fill in the required details and get results within seconds. For instance, if the investment plan is for ten years, the calculator will show mutual funds that deliver the highest returns within that period.
- Free of Cost: An online calculator is easily accessible and free to use using an internet-enabled device. Aspiring investors can use the tool from anywhere to calculate their SIP amounts and returns.
Conclusion
A mutual fund SIP calculator is highly beneficial for selecting the best investment plan to maximise potential returns and achieve your financial goals. SIPs have numerous investment possibilities to gain the expected returns without putting funds at market risk.
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