Systematic Investment Plans (SIPs) are popular in India today. As per data released by the Association of Mutual Funds in India (AMFI), the total amount collected through SIP investments in August 2024 was ₹23,547 crore. Monthly SIP calculators have made it extremely convenient for investors to plan their SIP investments in a way that can help them consistently grow their earnings over time. Read on to know how these free online tools are helping investors earn high returns and plan their investments better.
What is an SIP return calculator and how does it work?
An SIP calculator is a free-to-use online tool that helps you plan your SIP investments. Mutual fund returns calculators are of two types – SIP return calculators and lump sum SIP calculators. A lump sum calculator helps you calculate your expected returns by taking the total investment amount, expected rate of return, and investment duration as inputs. SIP returns calculators take the same fields as input – the SIP amount instead of the lumpsum amount – and help SIP investors calculate their overall returns.
How to use an SIP return calculator to plan for your monthly investments?
You must follow these steps to use a SIP return calculator:
- Enter your monthly investment amount
- Select your investment duration
- Enter your expected rate of return
- Calculate your returns
Reasons why you must use an SIP return calculator:
Here are four reasons why you must use an SIP return calculator:
- It helps you simplify complex returns-related calculations: If you wish to simplify the calculation of your mutual fund returns, you can use an SIP calculator. These calculators also account for factors such as inflation to help you accurately estimate your mutual fund returns.
- You can undertake financial planning using an SIP calculator: Using an SIP calculator, you can input different monthly investment amounts and calculate the ideal SIP amount that you must invest on a monthly basis to reach your investment goal.
- SIP returns calculators encourage regular investments in mutual funds: Seeing how well your investment would do if you were to consistently invest in it for the coming few months helps most investors feel encouraged. SIP calculators help you develop an investing habit this way.
- You can compare various mutual fund schemes using an SIP return calculator: One of the most important reasons why you must use an SIP return calculator before investing in a mutual fund is their ability to help you compare funds online. You can enter various monthly contributions, expected rates of return, and investment periods to choose the best fund.
In conclusion
After setting your investment goals, you must use an online SIP investment calculator to estimate your SIP returns in advance. Doing so will help you plan your mutual fund investments better and consequently help you stay on track in the long run. SIP calculators are available for free on the websites of major mutual fund houses.
