Mutual fund investments are on the rise in India. The introduction of affordable Systematic Investment Plans (SIPs) has contributed to the increasing popularity of mutual funds in India. Many fund houses offer affordable SIP schemes for retail investors in India. However, it is essential to indulge in research and analysis before investing in a mutual fund scheme through SIP. Investors can rely on the SIP return calculator to make better decisions. Let us discuss the uses and significance of the SIP calculator in detail.
What Are Mutual Funds SIPs in India?
Before discussing the uses of an SIP calculator, it is essential to understand how mutual funds SIPs work. You might know that mutual funds invest in a diversified portfolio of stocks, bonds, derivatives, cash equivalents, and other securities. You can purchase any of these securities individually from a stock exchange. However, a mutual fund invests in a basket of securities consisting of more than one asset. You can purchase mutual fund units and invest in a diversified portfolio. A mutual fund will have an experienced manager to make daily decisions. The fund manager’s fee is included in the expense ratio of the mutual fund scheme.
There are two methods of investing in mutual fund schemes in India. The first method is to invest a lumpsum amount in a mutual fund scheme. You will receive a given number of mutual fund units as per the investment amount. The second method is to invest in a mutual fund scheme via SIP. A SIP allows you to invest a regular amount in a mutual fund portfolio at fixed intervals. Top-up SIPs are also available to augment the investment amount after each instalment. SIPs are perfect for leveraging the power of cost averaging in the Indian market. When mutual fund prices are high, you will purchase fewer units through SIP, and vice versa.
Planning SIP Investments with an Online SIP Calculator
The SIP return calculator is an online tool used by investors to make better decisions. You can find one on the website of your broker or investment platform provider. The calculator is free to use. You just need to enter the details like expected return rate, tenure and the goal amount if you have a goal in mind. The calculator will instantly display the monthly SIP amount you need to invest. Here’s how to use an SIP calculator:
Find Monthly SIP Amount Based on Your Goal
SIP calculators can be goal-oriented. A goal-based SIP calculator will help identify the monthly SIP amount to achieve a return goal. You will enter your goal in the calculator, which is the return amount you wish after a given investment period. You must also provide the rate of return and investment period to the calculator. In return, the goal-based calculator will display the monthly savings or SIP amount required to achieve the goal. You can decide on the right SIP amount based on your income, goals, and other factors.
Find Returns for a SIP Plan
Many SIP calculators are amount-oriented and help find compounded returns over time. An amount-based calculator will determine the return amount after a given investment period. You will have to choose your SIP amount per month, investment period, and rate of return. The SIP calculator will take these as inputs and generate the expected return amount. Many investors rely on amount-based SIP calculators to plan their instalments.
Planning Without Any Hassle
A SIP calculator allows you to find the best SIP amount, return, and other details without indulging in complex calculations. The formula for the maturity amount of a mutual fund is lengthy and involves some calculations. You might waste more time by indulging in pen and paper-based SIP calculation. With the help of SIP calculators online, you can find results within minutes.
Self-Service with an SIP Calculator
A SIP calculator allows you to find things on your own without involving an agent. Investors do not have to repeatedly reach out to fund managers or houses to understand SIP schemes. They can find the return rates of different mutual fund schemes online and use the SIP calculator to find the preferred investment amount. However, you must not shy away from reaching out to your broker in a state of confusion. Since SIP calculations can be handled without any support, you can rely on customer support representatives for other requirements. For instance, you can ask them how to convert physical shares into Demat.
Find the Ideal Investment Horizon
Finding the ideal investment period is as important as determining the SIP amount. Investors form their exit strategies based on the investment period only. The investment period or horizon is the time duration for SIP investment. You will invest in the mutual fund scheme throughout the investment horizon. Your mutual fund return goal will decide the duration of your SIP investment. You only have to decide on a tentative investment horizon based on your return goals. Investors can always make an early exit depending on market conditions and personal preferences.
In a Nutshell
SIP return calculators help investors decide on the ideal SIP amount and more. Most brokers offer SIP calculators for free on their websites. You can use one to escape from complex calculations and make informed investment decisions. Plan your investment journey with a SIP calculator now!
Santosh Kumar is a Professional SEO and Blogger, With the help of this blog he is trying to share top 10 lists, facts, entertainment news from India and all around the world.