Wednesday , November 29 2023
SIP Calculator

Know How To Use A SIP Calculator To Invest In The Right SIP And Calculate Returns

Mutual funds are attractive to investors for all good reasons. Each one invests in mutual funds to get better returns with time. As a result, they seek out good fund schemes without realizing what good actually means. But, to be successful with your investment journey, especially with mutual funds, you don’t need to focus on the seemingly good ones but rather on the right one that is tailored to your needs and yet offers you the returns you want from your mutual fund investments. While mutual funds are risky enough, investing in the right ones can help you minimize additional risks and make them tolerable. For this, it’s important to analyze schemes, and SIP calculators ease your work in this section.

A right mutual fund scheme is the one that is selected based on deliberating various factors such as your financial situation, financial goals, investment horizon, etc. But, to be able to utilize all these factors and reach a decision is often time-consuming. There is so much to tap on and consider that it turns out to be tedious for many. If you are an investor planning to invest in mutual funds through SIP, we suggest you use a SIP calculator to make things easier.

The SIP calculators are often available online, enabling investors to perform rapid calculations related to the mutual fund investment to get valuable data for investment planning. SIP calculators are one such tool that helps you identify the best possible options from various available mutual fund schemes and plan your returns out of them. Some of the meaningful decisions you can carry out from the online SIP calculator are

  • Identifying the best & right mutual fund scheme
  • Returns from mutual fund investment

How do SIP calculators calculate returns and help find the right mutual fund schemes?

The online SIP calculator uses three variable inputs from users, like monthly investment amount, investment period, and the expected rate of return. It then processes those inputs and offers results accordingly. Investors must be wary of these terms & their importance and must be sure of what they need to put in.

  • Monthly investment Amount: It’s an amount that investors wish to invest in mutual funds through monthly SIPs. A SIP amount is decided by deliberating investors’ risk appetite and income structure. If you are confused about the same, you can consult your financial advisor and get your financial profiling done before investing. With a fairer idea of SIP amount, investors can choose better investment categories in line with their budget. SIP calculators allow you to input the amount anywhere, between Rs 500 and Rs 20,00,00, so whether you are a small or big investor, you can freely use this tool and get an approximation of your returns.
  • Investment period: It is also known as the holding period. It is an important factor to consider as it determines the financial need of the investor in a certain period and thus goals. It’s imperative to make realistic decisions regarding selecting your time frames. Mutual funds are known for long investment durations, so deciding on a less investment horizon of 1-2 years may not help you reap the returns you expect from your investments. If you wish to generate Rs 50 lakhs with a Rs 1000 SIP of 2 years, this is next to impossible. So selecting a proper time frame is essential, especially if you are starting to invest small.
  • The expected rate of return is essential when using SIP calculators for finding the best mutual funds. That is so because each mutual fund scheme has a different rate of return. The rate depends a lot on the scheme’s past performance. However, there can be no assurance that the fund scheme will sustain a similar performance in the future. Investors should only use the past interest rate of their chosen schemes as a reference to determine how much they can earn during their tenure.

How to use an online SIP calculator?

Here are the steps you can follow to use the SIP calculator from Glide invest to calculate returns and select the right mutual fund scheme for yourself.

  • Visit the Glide Invest website or download the app and under section tools, click on SIP calculator.
  • Select the amount you would like to pay as a monthly SIP installment. You can select a maximum of Rs 20,00,00.
  • Now choose the investment period. The investment horizon for which you have decided to stay invested in mutual funds to achieve the returns you expect. You can select the investment duration, anywhere between 1-30 years.
  • Lastly, select the rate of return based on the past interest rate of your chosen mutual fund scheme.

Once you select the amount, investment period, and rate of return, the SIP calculator will automatically do the calculations and produce results in numerical and graphical representations, indicating the following.

  • The maturity amount you will receive at the end of the holding period.
  • The total amount you would need for mutual funds investment to fulfill your goals.
  • Returns you will likely get from your SIP installments.

You can input different rates of interest values of funds to compare the returns of various mutual fund schemes. Doing this will give a clear picture of the performance of the fund scheme and make the selection process easier. However, note that the SIP calculator doesn’t consider factors such as expense ratio and exit load for calculation. So the results may vary from the actual ones. Investors should consider the SIP calculator results to be approximate. 

SIP calculators aren’t only good for selecting the right SIP and appropriate returns for yourself but also help you keep up with your financial planning, whether it’s short or long term while instilling a sense of consistency in the investment through SIP. Try for yourself.

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