Systematic Investment Plan (SIP) is a popular investment option that helps investors to invest in mutual funds in a disciplined and regular manner. SIP is a method where an investor invests a fixed amount of money at regular intervals, say monthly, in a mutual fund of their choice. SIP is a popular investment option because it is an easy and convenient way to invest and offers a host of benefits such as rupee-cost averaging and power of compounding.
One of the key benefits of investing in SIP is the potential returns it offers over the long term. However, calculating the potential returns of a SIP can be a complex task, as it involves multiple variables such as the amount invested, the frequency of investment, the duration of the investment, and the expected rate of return. To make this task easier, many financial websites offer SIP calculators. In this article, we will discuss how to calculate SIP returns using SIP calculators.
What is an SIP calculator?
An SIP calculator is a simple tool that helps investors calculate the potential returns of their SIP investment. It is an online tool that takes into account the amount of investment, the investment duration, the expected rate of return, and the frequency of investment to calculate the potential returns of the SIP investment. SIP calculators are available on many financial websites, and they are easy to use.
How to calculate SIP returns using SIP calculator?
To calculate the potential returns of a SIP investment using an SIP calculator, follow these steps:
Step 1: Visit a financial website that offers an SIP calculator. There are many financial websites that offer SIP calculators, such as Groww, FundsIndia, and Scripbox.
Step 2: Enter the amount you want to invest in the SIP. You can choose the amount you want to invest per month or per quarter. The amount can be as low as Rs. 500 and can go up to any amount, depending on the mutual fund and the investment platform.
Step 3: Enter the investment duration. The investment duration is the time period for which you want to invest in the SIP. It can be as short as 6 months or as long as 30 years, depending on your investment goals.
Step 4: Enter the expected rate of return. The expected rate of return is the percentage return you expect to earn on your investment. This can vary depending on the mutual fund and the market conditions. It is important to note that the expected rate of return is not guaranteed and may vary over time.
Step 5: Select the frequency of investment. You can choose to invest in the SIP on a monthly, quarterly, or annual basis. The frequency of investment can have an impact on the returns earned.
Step 6: Click on ‘calculate’ to get the potential returns of your SIP investment. The SIP calculator will calculate the potential returns based on the inputs you have provided.
For example, if you want to invest Rs. 10,000 per month in an SIP for a duration of 10 years and expect a rate of return of 12%, the SIP calculator will calculate the potential returns as follows:
Investment amount: Rs. 10,000 per month Investment duration: 10 years Expected rate of return: 12% Frequency of investment: Monthly
Potential returns: Rs. 27.9 lakhs
The SIP calculator will show you the potential returns that you can expect from your SIP investment. It is important to note that these are only potential returns and not guaranteed returns.
Conclusion:
In conclusion, SIP calculators are a powerful tool that can help investors make informed decisions about their investment plans. With the help of an SIP calculator, investors can easily calculate the potential returns of their SIP investment by entering the investment amount, duration, expected rate of return, and frequency of investment. The accuracy and ease of use of SIP calculators make them an essential tool for anyone looking to invest in mutual funds through SIPs.
It is important to remember that while SIP calculators can provide an estimate of the potential returns, there are other factors to consider such as market fluctuations, fund performance, and investor goals. Therefore, it is recommended to consult with a financial advisor before making any investment decisions.
Overall, using an SIP calculator is a great way to get started with SIP investing and to make informed decisions about your investment plans. By leveraging the power of compounding and rupee-cost averaging, investors can potentially earn higher returns over the long term through SIP investments.
SIP Calculator 
