A systematic investment plan calculator is a powerful tool that helps investors determine or predict the returns on their mutual funds made through SIP. Thus, helping investors to make informed financial decisions. In this blog, we will explore more about the systematic investment plan calculator, its uses, and how to use it effectively.
Contents
What is a Systematic Investment Plan Calculator?
A systematic investment plan calculator is an easy-to-use online financial tool that is designed for investors to get an idea about the returns they will get on their mutual fund investments made through a SIP.
This online calculator helps investors calculate the potential wealth gain from their monthly SIP investments made on mutual funds. Investors just need to enter the basic details like money invested (each period), investment tenure, and a rate of return from the mutual funds. Simply by providing these basic details
Calculating the returns manually is often time-consuming and effortful. The SIP calculator is a simple online tool that does the calculation in a fraction of time and gives a future idea of how much a mutual fund investment through SIP can be worth. However, investors should be aware that this financial tool does not provide accurate numbers, but gives a rough idea of the expected rate of return.
How to Use the Systematic Investment Plan Calculator Effectively?
The systematic investment plan calculator works on the formula FV=P[(1+i)^n-1]*(1+i)/i.
Where:
FV= Future Value
P= Regular Investment Amount Through SIP
i= Anticipated Rate of Return
n= Total Number of Investment
Within the formula, variables are input to determine the total value of returns generated on your investment.
Enter the amount you want to invest monthly, quarterly, semi-annually, or annually.
Next, you need to put the expected rate of interest on your investment.
Enter the tenure of the investment.
After filling in all the required details, click on the ‘calculate’ button, and instantly you will be displayed the estimated rate of returns that you can expect on your investment.
Example
Let us understand this formula better using an example:
FV= ?
P= 30000 Rs
i= 8%
n= 10 years
Therefore, FV= 61,96,561.
What are the Benefits of a Systematic Investment Plan Calculator?
The systematic investment plan calculator is designed to provide investors with potential returns that they can expect on their investments. Let us explore some benefits of the SIP calculator:
Comfort and Flexibility
The systematic investment plan calculator is a user-friendly financial tool that can be used from the comfort of your home at any hour of the day, providing comfort and flexibility to users. Also, it requires only a few inputs, making it simple even for beginner investors to predict their returns on investment.
Time-Saving
Calculating the potential returns of mutual fund investments manually requires a complex mathematical formula. However, using the investment calculator app makes it quick and easy, thus saving time and energy.
Prediction of Potential Returns on Investment
A SIP calculator helps investors get a rough idea of the returns they might gain on their investment. Predicting potential returns on investment enables investors to make informed decisions about how much they should invest regularly to achieve their financial goals. Also, this calculator helps eliminate the guesswork and
Informed Financial Decision-Making
This SIP calculator helps to make data-driven financial decisions and eliminates the guesswork. Also, users can compare various amounts, expected rates of returns, and tenure and check how these various scenarios impact the final returns.
What are the Disadvantages of a Systematic Investment Plan Calculator?
Although this online financial tool offers users several benefits, it is essential to understand its disadvantages as well.
Market Fluctuation
The SIP calculator cannot predict market changes, and it only provides the result of the present market performance of mutual funds. Thus, market fluctuations greatly influence the accuracy of SIP calculator results.
Inaccurate Returns Rate
This powerful SIP calculator results are based on current market scenarios. Due to market volatility if the interest rates decrease, it will have an effect on the final rate of returns.
Taxes and Inflation
Taxes and inflation significantly influence the rate of returns, and these factors are not accounted for by SIP calculators.
Conclusion
A systematic investment plan calculator is a very useful financial tool for investors, who want to predict the potential returns on their mutual fund’s investment through SIP. By entering a few basic information users can quickly get the results of future wealth. This tool not only simplifies this complex calculation but also saves time, provides flexibility, and helps in planning financial goals. Although this financial tool comes with many benefits, it is essential to understand that it provides return results based on current mutual fund market performance. Any changes in the dynamics of the market will influence the results of the SIP calculator. Hence investors should be mindful of the consequences as well for effective financial decisions.
