One of the biggest misconceptions regarding investing in mutual funds or systematic investment plans (SIPs) is that one has to be extremely knowledgeable to start investing in the market. However, even a beginner who needs more information or details about the stock or share market can easily invest in SIPs or lump sum mutual funds online.
There are several ways to build a financial corpus, like investing in government schemes, PF accounts, fixed deposits, post office investments, or real estate purchases.
To diversify your portfolio, you can invest in some flexible and return-generating mutual funds, equity, shares, or stock investments. In this regard, you can use a SIP calculator and a trustworthy platform to start with such lucrative investments.
What is a SIP Calculator?
A SIP calculator is a free digital tool that is easily available online on multiple platforms. It saves you from the tedious manual calculations and helps you assess the total investment you make through SIPs and the expected returns you may get after a certain period. Important elements of an SIP calculator are:
- The Monthly installment amount that you would like to invest in SIP
- Current interest rate (or expected interest rate based on historical data)
- The period for which you want to make the investment
Once you enter all three values, you will get an estimated amount of returns that you can expect from your SIP investment.
Key Features of a SIP Calculator
Some of the prominent features of a SIP calculator are:
Nearly Accurate Projection: A SIP calculator employs advanced algorithms to provide precise future investment values based on variables like initial investment, tenure, and expected returns. This helps investors make informed decisions by visualising potential outcomes.
Flexible Input: Users can easily input various parameters, such as investment amount, frequency, and expected rate of return. The calculator then generates a detailed breakdown of the investment’s growth trajectory over time.
Comparative Analysis: A SIP calculator often offers the ability to compare different scenarios, allowing investors to contrast outcomes by adjusting variables. This feature assists in selecting the most suitable investment strategy based on personal financial goals.
Visual Representations: Graphs and charts are commonly included to illustrate the growth of the investment visually. These visual aids help users comprehend the investment’s growth pattern and its alignment with their objectives.
Realistic Insights: By accounting for factors like inflation and compounding, a SIP calculator provides a more realistic perspective on how an investment’s value will evolve over time. This fosters a better understanding of the investment’s purchasing power and the need for wealth preservation.
Why Should You Use SIP Calculators?
Here are some reasons you should consider using a SIP calculator:
It Gives Quick Results
SIP calculators save you from complex calculations and give you error-free, hassle-free, and quick results within seconds.
Helps in Financial Planning and Strategizing
Using the SIP calculator helps you assess your long-term returns. This can help you assess your objectives and plan your funds and financial health accordingly.
Helps in Estimating the Rate of Interest
A SIP calculator considers a historical or market interest rate on your investments, thus giving you a fair idea of the expected returns. The calculator assumes a constant rate, whereas the interest rate could be a spike or downfall in the coming years. This isn’t guaranteed, so an average rate is taken into account while calculating returns.
Conclusion
SIP calculators are one of the most accessible, simple, user-friendly, and dependable digital tools. These come in handy while calculating estimated returns on your SIP investments and comparing different schemes based on these figures.
Moreover, this tool can help you visualise your overall growth. So, whether you are a seasoned investor or just a beginner, use a SIP calculator to make informed decisions.
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