sip calculator

earning money is good. but this is just the start. it's important to increase the value of this existing wealth. and this is where investment vehicles like mutual funds come into play. 

to introduce mutual funds briefly, they are investment pools handled by professional fund managers. 

these managers pool in the money from different investors to further invest them in stocks, bonds, money market instruments, and global funds for earning greater returns.  

people often use the terms mutual funds and systematic investment plan (sip) interchangeably. but there is a major difference between the two. 

let's decode this difference: 

• mutual funds is an investment instrument.
• sip is an investment route in mutual funds that allows an investor to invest a fixed amount in weekly, monthly, or quarterly intervals.

this is where the sip calculator for mutual funds comes in effect. this online calculator helps you stay updated by providing estimated values of your mutual fund investment returns.  

this calculator, however, does not take into effect the exit load and expense ratio (if any). thus, it yields "estimated" values. 

how does this calculator work?

to make the sip calculator work, you have to fill in the requisite information in its editable fields. the required information is the monthly investment amount, expected rate of return and investment duration. as you change these numbers, your sip return calculator will change its total investment amount and total expected return.

for instance, if you assume an expected rate of return of 10% and wish to invest for 20 years, here are two indicative scenarios -

• to build a maturity corpus of ₹ 50 lakhs, you will have to invest a little over ₹ 6,500 per month. however, if you invest a minimal ₹ 500, you will get around ₹ 3.82 lakhs at the time of maturity.
• one of the easiest ways of finding out how much you need to invest, how much you stand to earn or how long you need to invest, is to use the very simple and easy-to-use cred sip calculator.

how can you use the sip calculator?

when you decide to invest in an sip, you will either have a financial goal in mind or a certain amount that you wish to invest.

in the first scenario, an sip return calculator tells you how much you need to invest monthly and for how long, so that you achieve your goal. if you invest for a longer duration, your monthly contribution would be lower, and vice versa.

inversely, if you have a certain amount of money in hand every month that you want to invest in sip, a mutual fund sip calculator will tell you how much you can earn if you invest it for a given number of years. in this case, you can find out the duration that you invest for, to earn your desired amount, if any.

thus, an sip calculator can be of great help in taking the right sip decision. the cred sip calculator can be your perfect tool before starting an sip investment.

how can an sip return calculator help you?

if you want to know the probable maturity amount of sip investment, it will depend on your monthly contribution, the rate of return and the duration of your investment. taking all these three together, it is quite complex to calculate the return manually. an online sip return calculator helps you find out the estimated return in the blink of an eye. it gives a breakup of your total investment as well as the earning you can earn from it. these calculators help you to take the right sip investment decision.

the cred sip calculator is one of the most convenient sip calculation tools available online.

running the numbers on the sip calculator: an example

let's assume you are a fresh investor eyeing for sip mutual fund investments. you want to make a rs 2,500 monthly investment for the next 12 months, with an expected return of 12%. 

the sip calculator uses the following formula to generate results: 

fv = p × ({[1 + i]n – 1} / i) × (1 + i).

where, 

·       fv = future value earned upon maturity

·       p = fixed investment through sip

·       i = compounded interest rate

·       n = investment duration

now, your monthly return would be 12%/12 = 1/100 = 0.01 

hence, the estimated money you are entitled to earn upon maturity is: 

fv = 2500 ({(1 + 0.01)12 - 1} / 0.01) x (1 + 0.01)

fv = rs 32,017 approximately in 12 months. 

some pertinent advantages of the sip calculator

the advantages of using a sip calculator are manifold. let's discuss them here:

1. choosing the right mutual fund scheme 

we all know mutual funds are subjected to market risks. and no one can give a sure-shot answer on expected returns. this calculator, however, helps you work through these challenges to make an informed decision. 

plugging in your investment values under different sip calculators help you understand your risk-return-ratio. this way, you can choose the scheme that yields the highest return against your investments. 

2. better financial planning 

by using this calculator, you tend to be well-informed of the estimated returns on your periodic investments and the maturity value. 

this way, if you intend to plan a big investment in the future, you can estimate your holding position and take a better planning call. 

3. saves manual efforts 

this computer-operated calculator saves you a great deal of time and effort into doing calculations and re-calculations to arrive at the estimated returns. 

however, with one simple click, you can access this calculator, plug in your values, and get the result from anywhere in the world.

4. benefits of compounding 

sips is calculated on compound interest. while a minority of people somehow are able to calculate this manually, it's a complex task for most of us, especially for long-term investments. 

with this calculator, this worry remains no more. these calculators incorporate the compounding function and present quick results as accurately as possible.

how to invest in sip?

to invest in sip, you have to complete the kyc process, submit the required documents and complete the in-person verification. once done, you can register for the sip. you have to select the sip fund house and the contribution amount. the maturity amount will depend on how much you invest regularly and for how long. you can finalise this by filling your desired amount and duration in an sip return calculator.

a mutual fund sip calculator is the best tool while you decide your sip details. the cred sip calculator is a simple tool that gives you an estimate of the return that you can expect to earn on your sip. 

what are the different types of sips available?

the four commonly known sips in the market are,

in top-up sip, you can increase your sip amount in regular intervals by investing in mutual funds that are doing well. you can identify such schemes by comparing them on an sip return calculator.

perpetual sip is on where you don’t fill an end date while filling out the sip mandate. you can close the sip once you find that your sip has fulfilled your financial expectations. not that a regular sip can be invested in for a predetermined tenure.

flexible sip allows you to increase or decrease your regular sip amount at your convenience. you can contribute as per your cash inflow, contributing more if you earn a bonus or profit, and even skip an instalment if you are facing a cash shortage.

trigger sip is suitable for people who have good knowledge of the financial market. you can speculate your sip contribution timing after studying the market volatility. you can also seek the help of a mutual fund sip calculator to time your sip investment.

with the cred sip calculator, you can estimate your return by simply filling in the monthly investment, investment tenure, and expected return rate.

final words

making an investment decision requires a great deal of time and patience. sip calculators help you achieve your investment goals. utilise them to your advantage to reap the fruits of investment management.