Everything You Need to Know About SIP Return Calculator

A SIP or Systematic Investment Plan is a popular investment mode in India. For new investors or early investors, calculating the returns of a mutual fund is important as it will provide them with an idea about the final wealth they can accumulate through SIP. In this regard, calculating SIP manually can be strenuous and prone to error; hence, using a SIP return calculator expedites the process.

What is a SIP Return Calculator?

A SIP return calculator is a simple tool that lets individuals know about their estimated returns on their mutual fund investment through SIP.  Although these calculators are designed to help investors to provide an estimate of their returns, they lack the inclusion of exit loads and expense ratios. So, if investors want the exact returns they might consider calculating those manually.

Also, individuals must note that these returns are approximate returns and these can vary with the market fluctuations. Also, these estimates might also vary with mutual funds, as some of them tend to outperform or underperform the estimates.

Working Principle of SIP Return Calculator

A SIP calculator primarily works on the principle of M = P × ({[1 + i]^n – 1} / i) × (1 + i).

In the above formula - 

M = Maturity amount 

P = SIP amount 

n = count of payments

i = periodic rate of interest

Benefits of the SIP Return Calculator 

The most prominent benefits of using a SIP return calculator are -

1. Follows a Systematic Approach

An SIP calculator uses a systemic approach and hence, provides details on how to reliably invest in a mutual fund. It also tells an investor about the diversification of the fund including the time and the SIP amount. 

2. Easy to Use 

The simplicity of using a SIP return calculator is one of the primary perks of using it. This is primarily because prospective investors can provide all the prerequisites in the calculator and they will be able to see the invested amount and the maturity amount clearly. 

This in turn helps individuals to invest in a mutual fund of their choice based on their financial goals and plans. Furthermore, all the variables in the calculator are simple to provide and one can easily use it if all the information is known.  

3. Fast Calculations 

Another advantage of using a SIP return calculator is its speed and swiftness. Investors can choose this calculator anytime anywhere to know about the estimated returns. Moreover, this calculator is free to use and users can opt for this multiple times.

4. Proper Guidance

As individuals put details of the SIP in the calculator, they can see all the details concerning the probable outcomes after the investment period. This helps to guide an investor in choosing a mutual fund depending on their financial goal.

Hence, individuals looking to invest in mutual funds at regular intervals can consider a SIP return calculator for estimates. This is primarily essential because these calculators provide insights on returns and one can choose their fund reliably by using this as a guide.