Calculate Your Return with a SIP Calculator Online

Investment is the pillar of a secure financial future. However, investment comes with its own risks.  You might not know where to invest and how to invest especially when you are a beginner. In such a case, investing in options that do not require technical knowledge can be of big help. One such investing option is Systematic Investment Plan.

The SIP Calculator online helps you manage your monthly payments for an investment in a fixed deposit account. It's simple, easy to use and will allow your savings to grow with you. As a result, its gradually becoming the preferred mode of investment, especially for Indian investors.

Let’s read on further to understand the intricacies of SIP and how can you calculate the returns using an SIP calculator online.

What is a SIP?

A Systematic Investment Plan (SIP), sometimes known as SIP, is a feature provided by mutual funds to investors to enable them to invest in a disciplined way. An investor can use the SIP function to make fixed investments in the mutual fund scheme of their choice at predetermined intervals. Weekly, monthly, quarterly, semi-annual, or annual specified SIP periods are possible.

The fixed investment amount can be as little as Rs. 500. A SIP investment enables the investor to set away a certain sum of money over a predetermined period without worrying about the market situation because of the average cost and the power of compounding.

What is SIP Calculator?

The SIP calculator estimates the returns you could expect from your SIP investments. The calculator also estimates your monthly investment required to reach your desired corpus. In other words, it offers a road map for achieving your various financial objectives.

Without using a pen and paper, the calculator can be efficient at performing complex financial calculations instantly. A few simple inputs are required, and the calculator calculates the outcome in a couple of seconds.

But how are SIP investments calculated? For many investors, that is the essential query. A mutual fund SIP calculator online is the solution.

Three input boxes are typical for a SIP return calculator for mutual funds. They are:

• The invested amount each month
• Duration of investment
• Predicted yearly returns

You must input the amount you want into a fund each month. For instance, depending on the amount you choose to invest, it may be as low as Rs. 500 to up to Rs. 10,000 (or even more).

Another investment alternative is Recurring Deposit. A recurring deposit account allows you to set up an automatic transfer from your bank account to a predetermined amount every month.

How Does the SIP Return Calculator Help You?

According to several mutual fund experts, SIP investments may be more profitable than lump-sum investments. SIP investments assist you in developing financial discipline and in creating regular savings habits.

You can use an SIP calculator online to calculate the expected returns you'll receive after a certain amount of time.

The following are some significant advantages of the SIP Mutual Fund Calculator:

• Determine the Maturity Amount: The SIP calculator assists investors in forecasting potential profits after the investment period. 
• Simple to Use: SIP calculators are simple to operate and navigate. You must simply enter the data to estimate returns. The calculator also benefits investors by automating laborious calculations. 
• Graphical and Tabular Representation: The calculator displays the return projections in graphic and tabulated form, it makes it simple for investors to understand the returns and make defensible choices.
• Based on Growth and Quantity of Maturity: Using three growth scenarios, the SIP calculator calculates the returns. The three growth scenarios are based on above-average, average, and below-average returns.

Informed Choice: The free online SIP calculator allows investors to examine various return scenarios and use the information to assist them in choosing investments that would yield profitable returns.

How to Calculate Your Return on Investment with a SIP Calculator?

Even though you can always locate a SIP calculator online, you don't need to perform the calculations by hand. However, it is a good idea to understand how these figures are calculated so you can feel more secure about your investing strategy.

SIP calculators use the following SIP formula:

FV = P x {[(1 + r) n – 1] ÷ r} x (1 + r)

Where:

FV= Future value of an investment

P= Principal contributions each month

r= Expected rate of returns per month

n= Number of contributions towards the principal

The calculation would look like this for you, for example, if you wanted to figure out the FV for a SIP with Rs. 1,000 monthly contributions for two years and a 12% projected rate of return:

FV = 1000 x {[(1 + 0.01)24 - 1] ÷ 0.01} x (1 + 0.01)

Our estimated rate of return is 12% annually, which equates to 1% monthly; therefore, take note that the r is 0.01 in this case.

Final Thoughts: The Systematic Investment Plan calculator divides the future value of the SIP investment into two numbers: the expected return on the investment and the principal. At last, you should definitely consider using SIP calculator online to estimate the best possible profits out of your investment.