A systematic investment plan (SIP) is a useful channel of financial investment and a popular choice for many individuals today. With many products out there for your investment purposes, a SIP can be a good way to diversify your portfolio with its many advantages. While making investments, individuals think of the returns they can achieve, and this is only natural.
The major purpose of investment is to make returns that are sufficient to meet certain financial goals. Based on this, any investor would carefully choose a particular investment product. An effective online tool, the SIP calculator, helps you to calculate your returns for any SIP you may opt for. Moreover, this is easy to use by seasoned investors and freshers alike. However, before using it, you should have a brief background of a SIP and its related concepts.
Sound Investment with a SIP
An Online SIP calculator can help you decide how much to invest in a SIP and which plan suits your goals. A sound investment plan that gives you returns over a period is a SIP. The unique aspect of a SIP vs a regular mutual fund is that a SIP lets you invest your money in regular periodic intervals. The SIP, in effect, is a vehicle to invest your capital in a regular manner in mutual funds. When you select mutual funds to invest in directly, you have to dole out a lump sum for investment. With a SIP, practically anyone can invest with small amounts invested on a monthly basis (or any other periodic basis). The SIP makes it easy to invest if you are a small investor who can only invest limited amounts regularly. Furthermore, a SIP brings in the factor of disciplined investment, as you have to fix an amount that gets debited from your bank every month. This is then invested in the SIP of your choice. With a SIP calculator at your disposal, you can estimate your SIP returns and opt for plans accordingly.
Is SIP a good option?
If you are shopping for the ideal investment vehicle, you obviously would like to know if you are making the right move. A SIP calculator can aid in your decision as it tells you how much capital will get you aligned returns. Therefore, once you fill in all the correct details at prospective interest rates, you get a rough idea of how much you need to invest to get the gains you want. You must remember that a SIP actually functions as a scheme like a recurring deposit. It permits investors to take advantage of the compounding implications of wealth accumulation over time. Moreover, SIPs are attractive to all kinds of investors – small and young investors with limited funds, those who wish to save in a disciplined manner, and investors who have some cash to spare. One of the preferred choices of any millennial today, a SIP can make investment easy and a SIP calculator offers the convenience to make the right choice of investment. The advantage of a SIP is that investors do not have to be concerned about performance in the markets. The investment is simple to understand and the SIP calculator makes your life easy.
A SIP and a SIP Calculator
A SIP is not an investment product in and of itself, but a method in which to invest your capital. With a SIP calculator, you can calculate any potential returns with the SIPs you are considering investment in. This helps you to compare different SIPs and even types of SIPs to make informed choices. If you were undertaking calculations manually, the process would be tedious and cumbersome, but since everything that facilitates your financial choices is available online today, a SIP calculator can help you make quick decisions and make the most of opportunities for investment.
The SIP Calculator – How to Calculate Returns
Anyone today can use a SIP calculator online. Most financial company portals have different calculators for computing amounts of various financial products offered. You will also find SIP calculators on the digital portals of most large brokerages and AMCs (asset management companies, plus banking portals. Whether you are a novice with computers or not, a SIP calculator is easy to use, and with a simple menu-driven step-wise process, using it is child’s play. Here are the general steps to use a SIP calculator and get the results you are looking for:
- You can click on any tab on online portals that say “Calculate SIP returns” or give any information about online calculators. Alternatively, there may be a tab that says “Tools” and you will find online calculators here. You can click on this.
- You will be able to view different fields to fill in amounts.
- First, you have to fill in the amount you wish to invest (on a monthly basis). The minimum amount you have to invest in a mutual fund is Rs. 500, but some funds may have a mandatory amount set at Rs. 1,000.
- Another field requires you to enter the projected rate of return. You can estimate this rate of interest based on past rates in the same fund. It’s not completely precise, but you will get a fairly good clue.
- Fill in the period of investment (tenure). This is the duration that you wish to remain invested with the SIP.
- Some SIP calculators may require you to fill in the frequency of investments to be made, but most assume that you will make investments monthly.
- You can then press “Calculate” or any other indication to compute your SIP returns, and the SIP calculator will do its job.
Make Your Investment Life Easy
Investing in a SIP is one of the most efficient ways to generate wealth as the power of compounding is on your side. You can start in a small way and have the chance to increase your investment if you get the opportunity to invest more in the future. With a simple tool that is algorithm-based, the SIP calculator can give you answers to questions before you select any SIP investment.