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SIP Calculator – Systematic Investment Plan Calculator
If you want to accumulate wealth over the long term or have long-term investment/ financial goals, then one of the most important things you need to adore is a discipline in your investment approach. SIP or systematic investment plan assist you in building that discipline in your investment approach. However, you cannot jump into any SIP of any mutual fund scheme without evaluating the potential risks and returns over the investment tenure and here to help you there is a SIP calculator.
In this article, you will read about how the mutual fund sip calculator works to help you in your research and analysis for the right mutual fund scheme for your investment portfolio and plans. You will also read about how to use the sip calculator online and a lot more in this article.
What is a SIP Calculator?
SIP calculator is an online financial tool or to be a specific online calculator that helps in determining the probable income from a mutual fund investment. The calculator requires the user to input a certain set of data and information related to the investment and then it calculates the potential return. The SIP investment calculator is one of the most used financial tools in the industry as it is exceptionally helpful for planning your mutual fund investments and analysing their returns.
However, one thing the users of these calculators need to keep in mind is that SIP calculators offer an estimated return from your investment which can vary from the actual returns that you generate over the term. So, while these calculators are supremely useful for analytical purposes, the results cannot be taken as the ultimate results.
How can a SIP return calculator help you?
For calculating the return that you can generate from a SIP, you need to do a lot of calculations if you are doing it manually. These calculations include finding out the time value of money, future value, present value, compounding effect, and a lot more. It is rigorous for any person to manually calculate the returns from SIP investments. Here the mf calculator comes in handy as you just need to put certain values and then the calculation part is taken care of by the SIP investment calculator only.
- It helps you save time a lot which you have otherwise wasted in manually calculating the returns.
- It helps you compare multiple schemes within a short period as you do not need to spend a lot of time on a single SIP calculation
- It also helps you understand how much you need to invest to accumulate certain wealth after a certain tenure.
How do SIP calculators work?
The returns from a mutual fund via the SIP method are calculated by using the FV or Future Value. This is what the SIP calculator also uses to derive the estimated return from mutual fund investments.
The formulae for FV are as follows –
FV = P * [{(1+r) ^ (n-1)}/r] * (1+r)
Here,
- P
SIP value each month
- R
Expected rate of return per month
- N
Number of contributions towards the SIP
Let’s take an example of how this works in a SIP investment calculator.
Suppose, you want to invest Rs. 1000 in a month in a mutual fund scheme whose average return is 12% p.a. You want to continue this investment for 10 years. So, according to the given formulae above, the return from the mutual fund will be
FV = 1000 * [{(1+0.01) ^ (120) -1}/0.01] * (1+0.01)
= 1000 * 230.1 * 1.01)
= Rs. 232339
So, Rs. 232339 will be the final value (read future value) of your investment, where, Rs. 120000 is the total investment, and the return you have generated is Rs. 112339.
The SIP calculator works on the same formulae and when you put these variables into the calculator it will give you this FV.
Different types of SIPs and SIP calculators
There are different kinds of SIP, and thus, you need to adjust your SIP calculator accordingly. There are primarily four types which are as follows –
Step-up SIP Under this kind of SIP plan, the value of SIP which is the investment you make every month increases at regular intervals as chosen by you or the scheme. Suppose, you have chosen a step-up SIP which increases your SIP amount every year by 10%. In this case, you can use the normal SIP investment calculator by changing the investment amount for every year and then summing up all the returns or you can also use the Step-up SIP calculator or the growing SIP calculator which is also available online.
Flexible SIP There are flexible SIPs as well where the amount of SIP changes as per your requirement and need and for this, you can change the amount while using the mf calculator.
Trigger SIP This is a kind of SIP where you need to set certain triggers according to which the SIP will function. Suppose you want to invest when the NAV of a certain mutual fund scheme falls to a particular level. Now, you cannot sit in front of the laptop or mobile all the time to monitor the same, so you can set up the Trigger SIP where you mentioned the level of NAV of the fund at which you want to invest and then when and if the fund NAV reaches that level, your SIP will get triggered and the investment will be made. Now, for this also, you can use the mutual fund SIP calculator by adjusting the number of investments.
Perpetual SIP This is a kind of SIP which runs perpetually until you stop it manually, and for this, there is no tenure of investment. So, in this case, you can use the SIP return calculator by dividing the tenure into certain years or so.
How to use Bharti Axa's systematic investment plan calculator?
You can use Bharti Axa’s SIP calculator in different ways.
When you want to calculate an estimated return
So, when you want to know how much you can accumulate from your investment, you need to first determine and enter these variables into the SIP return calculator –
- Monthly SIP amount – This is the amount you want to invest every month in the fund using the SIP method
- Tenure of investment - You also need to determine for how long you want to invest in years
- Choose the expected rate of return – You need to also choose an expected rate of return. The SIP calculator will help you determine the same. For instance, if you are choosing any equity fund, then the average rate of return can be around 12% while for debt funds it is around 8% and you can choose and rate of return after analysing the funds.
Once you enter these variables, the mf calculator will give you the estimated return and total value of the investment for the end of the tenure of investment.
When you want to calculate the amount to invest for achieving certain financial goals
Now, suppose you know how much you would need at some point in time in the future but want to find out how much you need to invest for accumulating the same amount. For this also, the SIP calculator can help, where you need to enter the tenure as in after how many years you need that amount and also the expected return rate. The variable which you need to change here is the monthly SIP as that is what you need to determine and thus, you need to enter the future value of the investment to find out the monthly SIP amount you need to invest.
So, in both these ways you can use the online insurance calculator for SIP calculations. You can also change these variables as many times as you want and compare different mutual fund schemes easily.
Advantages of using Bharti AXA Life systematic investment plan calculator
Quick results
The first and foremost benefit of using the Bharti AXA Life systematic investment plan calculator is that you find the results in no time. These calculators immediately give you the results and the results change as you change any of the variables.
Helps in analysis
As you can use SIP calculators can be used any number of times without any cost, you can compare any mutual fund SIP schemes for better analysis and make a wise decision about choosing the right fund.
User-friendly
These mf calculators are super easy to use and they do not have any complicated functions thus anyone can use these calculators with minimal knowledge of investments and financial tools.
Conclusion
With these SIP calculators making an informed and wise decision about your investment choices has become super easy and hassle-free. You can use Bharti Axa’s SIP return calculator any time to find out the best mutual fund schemes for an investment portfolio.
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Frequently Asked Questions about SIP
What is SIP?
SIP stands for Systematic Investment Plan where you can invest in mutual funds every month rather than in one go.
Are SIP calculators free for use?
Yes, SIP calculators are online financial tools which are completely free. You can use it any number of times.
How to use SIP calculators?
You need to enter the variables like monthly SIP amount, tenure of investment and expected rate of return to use the SIP calculator.
Disclaimer
*For 30 Year Old Male, Endowment Plan Option, online purchase of policy excluding underwriting extra premium & GST.