SIPs are systematic investment plans floated by mutual fund companies. With these plans, investors are required to invest small amounts periodically to create wealth in the long run. And they are hugely popular too! Through FY 2021-22, SIP inflow in Indian money markets amounted to 1.24 trillion as compared to 96,080 crores recorded in 2020-21! 

A SIP calculator can be used for a fair idea of the corpus that would be accumulated at the end of the investment tenure. SIPs are highly popular especially with a young investor because it inculcates financial discipline, early in the day. The earlier you start, the better it is! 

Understanding the Working of a SIP Calculator

A mutual fund SIP calculator will ask the following questions:

What is the monthly amount you choose to invest?

Here you can punch in the amount you plan to set aside every month, week, or quarterly. Some schemes will begin with a minimum investment of Rs. 500 whereas others may require RS. 1000 as the starting off amount. 

What would be the investment tenure you are looking at?

Depending on how long you choose to stay invested in this fund, you can choose a somewhat close period. 

Expected Annual Returns

This is likely to be a gross estimation. Although exact values are not available, you can determine a possible rate based on the performance track record of the fund. The rate can then be applied to the SIP calculator you have chosen to arrive at a probable amount that would be accumulated at the end of the specified tenure. 

When you choose a mutual fund SIP calculator online, it is wise to select one that factors in inflation while making calculations. Calculators will differ from one company to the other. Picking the right one can make a big difference in investment forecasting. 

Lump-Sum Calculators

Just like a SIP calculator online, lump-sum calculators make calculations based on one-time investments made to a mutual fund. These calculators can be used to determine the amount that is required to be invested for generating the planned corpus within the given time frame. It is to be kept in mind however that systematic investments should be preferred over hefty contributions made one time. Lump-sum investments are not privy to the benefits associated with rupee cost averaging. A systematic investment plan however allows countering market fluctuations as you continue to spend on more units when prices are low and lesser units when prices are high.

SIP Calculators and their Benefits 

When it comes to SIP investments, readings of calculators make it essentially faster and easier for an investor to plan things at their end. The formula may seem complex when calculated manually and the chances of errors can also be significantly high. When you use calculators, results are accurate which can be then used in making informed decisions when it comes to planning investments. Managing investments and tracking your financial goals becomes simple, easy, and fast. 

Calculators also help in keeping you on track when it comes to sticking to your periodic pay schedules!