A systematic investment plan or SIP allows you to invest a fixed amount in a mutual fund at regular intervals. Because the amount and timing are planned in advance, it can support goal-based investing. SIP Calculator It helps in estimating future value of these regular investments. It doesn’t forecast actual returns, but it can help you try out various amounts to invest, periods of time and assumed rates of return.
What is SIP Calculator?
A SIP Calculator is an online tool that helps you estimate the possible growth of a monthly SIP over a chosen period. You generally have to key in three parameters: monthly investment, investment tenure and expected annual return.
The calculator then displays the total amount invested, estimated gain and projected value. Mutual Funds being market linked the final value may differ from the estimate.
How to Use a SIP Calculator
1. Define your monetary target
Start by determining what you are investing for. It could be education, a home, retirement or some other planned expense. Set a target amount and target year.
2. Enter the Monthly SIP amount
Add the amount you plan to invest every month. Choose a figure that fits your income, expenses, and other financial commitments.
3. Select the investment period
Enter number of years for which you want to continue SIP. The investment period is the amount of time that each payment is invested.
4. Enter an assumed return
Add an expected annual rate of return. This is a mere assumption. Mutual Funds do not have fixed returns, so do not consider the result as fixed maturity value.
5. Review the estimated value
The calculator will show the investment made and estimated corpus. Compare this to your goal. If there is a gap, you can change the SIP amount, tenure or assumed return and run the calculation again.
SIP Planning Example
Suppose you want to invest ₹5,000 every month for 10 years. You make a monthly SIP of ₹5,000, tenure of 10 years and assumed annual return of 10%. The calculator will calculate the value according to what you have entered.
Next, you can try another case, say, Rs 6,000 a month for the same period. This allows you to see how changing your contribution might affect the projected corpus. Note: These figures are estimates and actual fund performance may differ.
Significance of SIP Calculator in Mutual Fund Planning
A SIP Calculator can help you convert your monetary goal into a monthly investment estimate. And it also allows you to compare different times and levels of contribution without having to do the maths yourself.
The tool is also useful for periodic reviews. If your income, target value or time horizon change, you can input new figures and see if the plan still fits the target.
But don’t rely on the calculator alone to pick a mutual fund. Be watchful of scheme category, investment objective, risk level, costs, portfolio and scheme documents too. SEBI explains, “The investor should verify whether the objective of the mutual fund scheme is in sync with his/her needs.
SIP Planning Using Bajaj Broking
Bajaj Broking provides an online SIP Calculator that allows you to input the monthly SIP amount, investment horizon and expected return. The tool presents the invested amount, projected returns and estimated maturity value.
For readers interested in Mutual Funds, Bajaj Broking can be considered as a platform to use a SIP Calculator and explore mutual fund options within the same ecosystem. This calculator can help for initial planning but scheme details and risk factors to be checked before investing.
Points to Remember
SIP Calculator is an illustration and not a commitment of returns. Mutual fund values can fluctuate and market conditions can change. Make realistic assumptions . Review the plan at regular intervals .
Also, don’t pick a scheme just because a calculator shows a nice figure. Please read the scheme information document carefully before investing. Know the risks.
Conclusion
A SIP Calculator can help make mutual fund planning easy and systematic. Select a period . Add an assumed return . Review the estimate . Start with a goal . Enter the monthly investment . Use the result to test different scenarios. Then take the mutual fund scheme separately and before making an investment decision.
