Market uncertainties and complexities when it comes to investments prevent many from starting their journey. But one factor that completely discards their desire to invest is the lack of funds. This is when Systematic Investment Plans enter the picture. It is an organised investment approach that allows you to invest a small sum regularly for a fixed period. Moreover, tools like the SIP Calculator makes it easier to handle the SIP.
It calculates the wealth gain and expected returns on investments, be it monthly, quarterly, half-yearly, or annual tenure. It offers a rough estimate of the maturity amount based on the projected annual return rate.
How to use the calculator?
For efficient Mutual Funds planning and calculation, it is best to use a calculator. Whether you are planning for retirement or higher studies, the calculator gives the exact amount you should park aside. Here is how to use it:
- Enter the target amount you want for accomplishing your goal
- Enter the number of years within which you intend to complete the goal
- Enter the expected return rate
For example, you want to accumulate a corpus to buy a house. For this, you plan on collecting Rs. 25 lakh in the next six years. Your scheme delivers a 7% return. Then, you can use the calculator to compute how much you can invest in Mutual Funds through SIPs. Based on this, your calculation would be:
- The total corpus you want to achieve: Rs. 25 lakh
- The number of years within which you want the funds: 6 years
- Expected rate of return: 7%
The SIP calculator computes the value to invest, i.e., Rs. 22,299 monthly to achieve the goal of buying a house.
Quick tips for using the calculator effectively
- Check your priorities
Define and prioritise your goals accordingly. Once done, spread those goals based on urgency. For example, you wish to buy a new car in the next two years. Now, your investment amount should let you achieve that. It adds up to the desired amount through the power of compounding when you calculate with the calculator.
- Change the investment amount
You need not stick to one investment amount for the entire scheme. If you have more corpus or receive a salary hike, you can change the investment amount to meet your goals quickly. The new SIP amount gets calculated through the calculator. However, check the process for changing the amount beforehand.
- Enter the correct details
While using the SIP calculator, make sure you add the right details. Go through the inputs once again before you submit. That way, you can dodge unnecessary confusion and errors.