Looking to invest as per your financial capability and get lucrative returns? You’re looking for a mutual fund scheme. With mutual funds, you can choose to invest in a lump sum or opt for a SIP (Systematic Investment Plan) mode. SIP is a process that allows you to invest a fixed sum of money in mutual funds at a preferable frequency – weekly, quarterly or monthly. You can begin your SIP with as low as Rs. 500 and can use a SIP calculator to determine the returns on your mutual fund investments.
Here is everything you need to know about using a SIP calculator to calculate your mutual fund SIP:
What is a SIP calculator?
A SIP calculator is an online tool that helps you understand the projected returns on your SIP mutual fund investments. As a potential investor, if you want to know the returns a specific sum will give you when you invest it in mutual funds, you can use a SIP calculator. However, the SIP calculator only gives an approximate estimate. The actual returns depend on factors such as asset allocation, market performance, investment duration, expense ratio, exit load, etc.
The SIP calculator helps you know the wealth gain and potential returns on your SIP investment according to a projected annual rate of return.
What can a SIP calculator do for you?
Mutual fund investments through SIP have become a preferred choice today, primarily because of the financial convenience it offers. SIP investments help you become disciplined and also save consistently to achieve your short-term and long-term goals. With the help of a SIP calculator, you can know the expected returns on your investment at the time of maturity and understand the total investment required to achieve a specific financial target.
How to use the SIP calculator?
Using a SIP calculator is easy. You only need to enter simple information like:
- SIP investment amount (the amount you want to invest in the mutual fund scheme)
- Investment horizon
- Expected annual returns
For instance, you want to buy a house after ten years and want to invest Rs. 4,000/month in mutual funds through the SIP mode. You expect the returns to be around 10%. In this case, you will earn a total of Rs. 8.3 lakhs at the end of the mutual fund scheme tenure. If you invest Rs. 5,000, you can accumulate Rs. 10.3 lakhs in the same scenario.
This helps you understand if the investment returns of your SIP mutual funds will be sufficient to buy a house. If the house you want to buy is worth more than ten lakhs, you will need to increase your SIP installments to reach your financial target. However, when assessing the returns, be sure that the SIP calculator considers inflation so that you know the realistic value of your mutual fund earnings.
Conclusion
You can easily use the SIP calculator on any verified investment app, such as Tata Capital Moneyfy App, or even on websites online to know how much money you need to invest in mutual funds to accomplish your goal.
