SIP Calculators: What Are They and How Do They Work?

A Systematic Investment Plan, widely known as SIP, is a scheme to invest in mutual funds. This scheme requires the investor to make regular automated contributions periodically. It is a great investment plan for someone who does not have a lot of knowledge about mutual funds but still wants to invest in them. You can choose the SIP amount and the time period and further start making contributions daily, once a week, once a month, once a quarter, and so on. If you wish to know the estimated returns on a SIP before you start investing towards it, you can do so with the help of a sip calculator online. Let’s first understand what exactly is a SIP calculator and how it works. 

What is a SIP Calculator?

The SIP calculator is an online tool that finds out how many returns you will be getting on your SIP approximately. This calculator is simple to use and only requires you to fill in some basic details regarding your SIP. It displays the information in a graphical format, along with sharing the results in numbers. 

The Formula Used by This Calculator

Mentioned below is the formula used by this online tool to determine the value of your SIP investment: 

M = P x ({[1 + i] n-1}/i ) x (1 + i)

Where, 

M stands for the maturity amount,

P stands for the amount you invest at regular intervals,

i stands for periodic rate of interest,

and N stands for the number of payments you have made. 

Let’s understand it better with the help of a few examples.

Example 1

If your monthly SIP investment is INR 15,000 with a sip interest rate of 12% for a tenure of 12 years, the estimated returns on your investment would be INR 26,73,783.

Example 2

If your monthly SIP investment is INR 5000 with an expected rate of return of 10% for a tenure of 5 years, using the above-mentioned formula, the estimated rate of returns on your investment would be INR 90,412.

Who Can Use This Unique Calculator?

The answer to this question is anyone! Anyone interested in investing in mutual funds or just curious to know how much returns they will get if they invest a certain amount in a SIP can use this tool. You do not need an existing SIP to use the sip investment calculator, just fill in the amount that you would like to invest some time in the future, and it will provide results according to the information shared by you. This makes it a great tool that allows you to plan well by getting a clear picture of your finances. 

Benefits of Using Sip Return Calculator

Mentioned below are the benefits of using a SIP calculator:

#Convenience

Maths is not everyone’s strong suit, and some may find it a strenuous task to calculate the returns on their own. The best thing about using this calculator is how simple it makes the process. While you can use the above-mentioned formula yourself to calculate the returns on your investment, manually calculating it will take a lot more time. This quick tool gives you the results the moment you enter the details in it. 

#Evaluate Before Investing

This is a no-brainer that one should never invest without making a plan. And you can only plan your finances when you know the approximate results of an investment that you are about to make. SIP calculator India helps you get a clear picture of how much interest you are going to earn on your investment approximately, making it easier for you to plan. 

#Accurate Results in No Time

The chances of an error in the calculation are more when a human is calculating as compared to technology doing the task. Using this online tool gets you accurate results instantly. You will not need to do the math twice, like when you do while calculating something manually. 

How to Use a Systematic Investment Plan Calculator Online?

Mentioned below are the steps to use a SIP calculator:

• Look for an ‘online SIP calculator’ with the help of your search engine or directly visit https://navi.com/calculator/sip-calculator .
• Once you successfully open the calculator, it will ask you to provide three essential details to calculate your SIP returns.
• These details will be your monthly investment, the expected rate of return on the investment per anum (in percentage), and the tenure of the investment (in years)
• You can drag the pointer below each option to the desired digits or directly enter them in the space given beside the options.
• The moment you enter the details, your estimated rate of returns, along with the invested amount and total value, will be displayed in front of you by the sip interest calculator.

How to Start a SIP?

If you are someone who is planning to start a SIP, you can do so by following the steps mentioned below:

• The first and crucial step is to complete your KYC. 
• Choose the type of SIP you want to invest in. Whether it is a regular SIP, top-up SIP, flexible SIP, trigger SIP, or any other, that fits your finances. 
• Set your SIP amount and the frequency of the contributions. Whether you’d like to do it weekly, monthly, or yearly, your evaluations from the systematic investment plan calculator will come in handy at this step. 
• Once you have gathered and decided on the above-mentioned information, visit the financial institution’s online portal through which you are willing to start your systematic investment plan. 
• You will be required to fill out their online application and submit the necessary documents.
• Once your application gets approved, your SIP will start. You can then give standing instructions to your bank to start making automatic payments toward your SIP.

Summary

The secret to getting close to your financial goals lies in investing your money in the right places. Mutual funds are one of the popular options for investing. One way of investing in mutual funds is through a SIP. Before you start this scheme, you can evaluate the estimated returns through a sip calculator online. This easy-to-use calculator gets you accurate results in no time.