It is pretty confusing to invest, especially for a first-timer like you. However, some tools might make investing easier for you to do. One of these tools is the sip calculator. SIP or systematic investment plan, as you might have been putting some amount regularly into mutual funds over some time.
In this article, we have covered all about how a SIP calculator functions, why it could be beneficial, and how you can use it to plan your investment smartly and stress-free.
How Does the SIP Calculator Work?
It is very easy to operate a SIP calculator and does not call for any finance knowledge at all. Here is exactly how it is.
Enter Monthly Investment: You would input the amount that you will invest every month. As you would like, the amount can be anything you can afford based on your capability, starting from even a few hundred rupees.
Add the Expected Rate of Return: Then, add the expected rate of return. It could be equity funds or debt funds.
Add the Duration: Then, add how long you want to stay invested.
See the computation: After providing the above information, the calculator will compute for you the approximate amount invested and returns at the end of your chosen period.
You can now manipulate different investment amounts, return rates, and time durations to see what impact these create on your prospective earnings.
Advantages of using a SIP calculator
Effective Financial Planning: The SIP calculator helps you plan financially much more effectively and gives a clear idea of just how much you need to invest regularly to meet your goal.
Time Saved: The SIP calculator saves you time because of complex returns that would be calculated manually.
Informed Decision Making: This will give you the scope to test and work on variable, periodic, as well as return rates, so you will be able to choose the correct strategy for your requirements.
Why SIP for Investment?
SIPs are one of the most popular investment options for a reason. It provides you the opportunity to invest in small, manageable amounts at periodic intervals, so anyone with an income level can invest. SIPs are beneficial in so many ways:
Discipline: SIPs make disciplined investments by locking you into periodic investments.
Compounding Growth: Compounding makes your SIP more beneficial the longer you keep the money in.
Best SIP Plans
Investment Objectives: Identify which is the investment goal—a house, education for your children, or retirement planning. Choose a plan that suits your time frame and requirements.
Risk Appetite: Know your risk appetite. Equity funds give you higher returns but take more risks, whereas debt funds are less risky and may not give you as much return.
You can use a SIP calculator when you evaluate a plan because you find out which one suits your financial condition well.
Conclusion
A SIP calculator is one of the best investment tools that provide clear insight into your potential returns along with simplifying the method of investing. It helps you arrive at the right decisions, make the best sip plans, and create a simple plan for your future finances. Be a novice or an experienced investor; a SIP calculator makes investment management easier and more effective.
Other websites like 5paisa will also offer you many resources and tools about SIP investments. Through them, you will be able to explore lots of other possibilities and find out the best ones to suit your requirements.
