Use SIP Calculator to Calculate Returns on a SIP Investment in 2022

SIP stands for Systematic Investment Planning. It is an investment approach that is disciplined. With the help of the SIP route, one can invest a fixed amount in mutual funds at a specified interval. The intervals can be semi-annual, quarterly and monthly basis. There is a facility for auto-debit techniques. This would automatically transfer the amount to the fund from one’s bank account. One need not take any stress – the decent amount gets shared on the designated date. This helps one with not missing any dates. 

One can create long-term wealth with the help of SIP. This investment is reoccurring in nature. It would help one to develop the habit of savings. It is not unknown that the financial market is volatile. So, it saves one from that uncertainty. One can calculate the return with a SIP calculator. 

What are the different kinds of SIP? 

1. Top-up SIP: This Systematic Investment Planning helps one to change the amount of their instalment. One can change the fixed amount at a pre-defined interval. 
2. Flexible SIP: Until now, SIP means to invest a certain amount in a mutual fund in an organised manner. But there can be situations in which one might not be able to pay the same amount every month. In such a case, one can choose a flexible SIP. One has the liberty of altering monthly investments depending on cash flow. If facing any financial crunch, one can reduce the SIP amount. If there is high cash flow at any month, one can invest depending on that. 
3. Perpetual SIP: Investors would generally be inclined to invest in a mutual fund with a fixed period. There are different spans of tenure. It can be ten years, five years, three years or 6 months. But it can be so that one does not want to have any fixed end date. This can be achieved if one chooses perpetual SIP. With this, one can invest in their fund for as long as they want. One needs to provide clear instructions to AMC so that they cease it. The amount can be redeemed by one when the desired corpus is reached. 

What is a SIP calculator?

The SIP calculator is a straightforward tool. This helps a person to have a clear idea about the returns of their mutual fund’s investment made by SIP. This method of investment is quite common among millennials these days. 

The mutual fund’s SIP calculator is specifically designed to help investors know about the investment estimate. Many factors depend on which the actual value of the investment can vary. But one will not be able to have a clear idea of the expense ratio and exit loan. 

One will learn about the wealth gain and the expected return for SIP investment. One can get a rough idea of the monthly SIP. It would be based on the projected annual rate return. 

How does a SIP calculator help one?

Many experts say that SIP is one of the most lucrative ways of investment. This creates a financial discipline in one. It also helps create a good habit of savings that would benefit one in the long run. The SIP calculator is a very beneficial tool. One could get an estimate of the return one would get after investment tenure. 

Few benefits of the SIP calculator: 

1. Helps one to determine the required amount that they want to invest. 
2. It would help one to know the total amount that one had to invest. 
3. This provides an estimated value of the return. 

How does a SIP calculator work?

There is a formula depending on which SIP calculator works. The formula is: 

M = P × ({[1 + I] n – 1} / I) × (1 + I). 

Where:

1. M means the amount one receives on maturity. 
2. P refers to the amount one invests at every regular interval. 
3. n refers to the total no. of payments that have been made. 
4. I refer to the periodic rate of interest. 

Market conditions play a vital role in fixing the interest rate of SIP. It may either decrease or increase, which would affect the estimated return. 

What are the benefits of SIP? 

1. Averaging of rupee cost: SIP makes sure that when the market is low, one buys more funds, and when it’s high, then fewer funds are accepted. 
2. The power of compounding: Compounding means earning income on the principal investment and earned income. 
3. It is simple to invest: The process of investing with the help of SIP is quite simple.
4. It is the ideal tool for financial planning: When someone invests steadily every month, they can fulfil their financial goals. It can be both short term like travelling or long-term, like building the dream house for oneself. 

Conclusion

As per the research, SIP investment is quite popular these days. It is one of the best investment options. One gets to invest in mutual funds with the help of SIP. The investments are made of a fixed amount and at a specified interval. The SIP calculator is a great financial tool. It helps one to know the returns they will get from their investment. One can get these calculators all over the internet. They give excellent results; one could calculate such things in a fraction of a second. If a person needs any financial option, then “Piramal Finance” is an excellent personal loan/financing option for buyers. They also have great blogs that one can read if one needs them.