If you want to save yourself from the financial catastrophes that adulthood comes with, financial planning is essential. An important part of financial planning is wealth building, wherein investment plays an immense role. This is because your basic salary would most probably be inadequate to meet your savings goals. You would need another source of income; if not that, a way to build wealth.
All the reasons why SIP or Systematic Investment Plan is becoming popular among young investors.
If you are reading this article, you would probably be knowing what is SIP. So, let’s skip
what you already know and focus on what you need to know about – ASIP Calculator.
We’llbe telling you all about a SIP calculator, including what it is, how it works, and the benefits of using it in this guide.
What is a SIPInvestment calculator? How Does it Work?
The name gives it away, a SIPinvestment calculator is an online tool specially designed to calculate returns made by an investor in a Systematic Investment Plan (SIP). With the help of a SIPcalculator, you can calculate the absolute value of the amount you invested after a certain period of time.
The investor is required to provide information on the rate of return, accumulated amount, and investment tenure.The calculator will give you a clear estimate of the amount you need to invest in your total earnings accumulatedduring the investment period.
How to Use a SIP Calculator?
A SIP investment calculator is widely available online. So, the first step to usinga SIP calculator is to select the website. Once that is done, you have to login with your ID in case the website requires you to do so. The good news is you can use the SIP Calculator for free.
Here’s how to use a SIP Calculator:
Step 1: Provide the relevant details. The details include investment made on a monthly basis and the rate of return. Please note that the minimum investment on SIP is INR 500 per month. The tool computes the estimated returns on the basis of a particular investment scheme. To derive the possible rate of returns, it’s essential to calculate a figure based on the fund’s past performance.
Step 2: Once you enter these details, you need to add the investment tenure as well. The minimum tenure for SIP is 6 months. However, it is suggested that you keep investing in SIP for a longer duration to multiply your wealth faster.
You can also explore various options regarding the amount of monthly investment by changing the variables in the calculator. It is to be noted that the output is calculated after considering the possible rate of inflation and capital gains tax.
Benefits of Using a SIP Calculator
- It’s Simple, Easy to Use:
A SIP calculator features an interface that is simple and easy to use. You just need to enter a few details and the calculator would give you results.
2. Saves Time:
Manual calculation of returns made through a Systematic Investment Plan can take a lot of time – given the fact that it requires a lot of complex calculations. With a SIP calculator, you can calculate the returns in a jiffy.
3. Free from Errors:
A SIP calculator is an online tool; this means it will give you accurate results that are free of errors and calculation mistakes. Even though it’s possible to calculate returns manually, it will be subject to human errors. That’s why it’s best to use a SIP investment calculator instead of going oldskool and making your work complex.
4. Helps your Financial Planning:
Financial planning is essential when your goal is to create a strong financial position in the future. You can use a SIP calculator to estimate your returns upon investing in SIP. You can keep an estimate of the amount you would be required to invest to meet your saving goals. You can also figure out if the returns are as high as you would be expecting them to be.
Lastly, Some Tips you can Use to Start Investing in SIP
Now that you know how to use a SIP calculator, you can use it calculate your returns. Having said, here are some tips that you can use to start investing in SIP.
- Begin early even if you have to begin small.
- Do not withdraw early. It’s better if you keep investing in the scheme for a longer time.
- Keep reviewing the performance of your funds from time to time.
- Do read these mutual fund guidelines formulated by SEBI before you start in investing in SIP.