A Systematic Investment Plan (or SIP) is a popular investment vehicle for almost all Indians. It offers the convenience of breaking down large, lumpsum investments into smaller instalments while giving competitive returns.
Plus, you can choose the periodicity of these payments depending on the liquidity available. One can say that SIPs are Recurring Deposits (RDs) on steroids!
However, before you put your money into SIPs, you need to build and follow an investment plan to achieve your financial goals. Here is where a SIP calculator can come to your rescue. On that note, let’s take a look at some notable benefits of using a SIP calculator:
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Quick and Simple to Use
SIP calculators are easy to use. You only need to enter a select few inputs – the SIP amount, the expected per annum rate of return, and the investment duration onto a user-friendly interface.
As you adjust these values, the SIP calculator will compute the returns in real time! With such express results, you can make quick decisions regarding your investments.
Available at No Cost
Despite being an invaluable service, SIP calculators are available at no cost. In other words, you do not have to hire a financial advisor (but we do advise you to practice due diligence) or pay any fees to work out how much you will gain. Plus, you can use it multiple times to test different situations – still at no extra cost!
Personalized Results for Personal Details
Even though the market faces some degree of uncertainty, a SIP calculator is the closest thing you have to accurate, customised calculations of the returns on your investment.
By entering personalised inputs, such as the expected rate of return, investment horizon, and SIP frequency, you can get personalised results of the sum at maturity.
Future Growth Based on Past Performance
If you already have a mutual fund in mind for a SIP, then you can track its past performance to get the average growth rate. Entering this per annum rate will further finetune the results of the SIP calculator and give you precise estimates of the maturity amount.
Visual Representation of Wealth Appreciation
Even though the SIP calculator carries out a good amount of number crunching, it makes information accessible and easy to comprehend. It displays your total investment and the future value of your investment. Moreover, it depicts this data through informative and engaging visuals like graphs that make the insights easier to recall.
Goal-Led Investment Strategy
A SIP calculator reverse engineers your investment strategy. You can tinker around with the variables and tweak them until you get the desired maturity amount corresponding to your financial goal. Using this, you can identify the right SIP amount and frequency that will help you achieve this goal in the prescribed timeline.
Smarter, Informed Decisions
Whether you are a seasoned investor or an absolute newbie, the SIP calculator is a crucial tool for everyone.
It helps you conduct quick research while quantifying the expected results so that you can make smarter, well-rounded, and informed decisions on whether you should proceed with the investment or put the idea on hold. Think of it as a tool to validate your decision, if already made.
In Conclusion
A SIP calculator is a great way to visualise wealth appreciation and progress toward a financial goal. It is also an invaluable tool for when you wish to compare different scenarios, like SIPs with different returns, investments for different tenures, etc.