A Systematic Investment Plan, or SIP, is a process of investing a fixed sum of money in mutual funds at regular intervals; SIPs typically allow you to invest weekly, quarterly, or monthly. Potential investors may mistakenly believe that SIPs and mutual funds are the same thing, but SIPs are simply one way to invest in mutual funds, with the other being a lump sum. A SIP calculator is a tool that helps you determine the returns you can obtain when parking your funds in such investment tools.

What is an SIP Calculator?

An online tool called a SIP calculator assists investors in estimating the possible returns on their Systematic Investment Plans (SIP) contributions in mutual funds. Based on variables including the investment amount, duration, and estimated rate of return, it gives you an estimate of the future value of your investments.

Because every monthly contribution has a distinct holding time and, consequently, a varied return rate, manually calculating SIP returns can be challenging. By automatically calculating the expected maturity amount, the SIP calculator streamlines this procedure.

However, variables like exit loads, expenditure ratios, and market swings could affect the actual returns. A SIP calculator provides a reasonable approximation to assist investors in better financial planning, even though it does not take these factors into consideration.

How can a SIP Calculator Help You?

The Systematic Investment Plan (SIP) calculator is a powerful online tool designed to help investors estimate the future value of their SIP investments. It provides a clear breakdown of two key figures:

• Investment Amount: The total amount you invest over time.
• Estimated Returns: The potential growth of your investment based on a projected rate of return.

By using the SIP calculator, you can get a detailed overview of how your investments may grow over a specific period, depending on your monthly contributions and the expected rate of return. This helps you plan your financial goals more effectively.

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Additionally, while the SIP calculator does not explicitly account for inflation, you can still factor it in manually. Here’s how:

• Determine your target real rate of return (the return you want after adjusting for inflation).
• Use the prevailing inflation rate to calculate the nominal rate of return you need to achieve your goal.
• Input this adjusted rate into the SIP calculator to get a more realistic estimate of your investment growth.

This way, the SIP calculator becomes an even more versatile tool, helping you make informed decisions about your mutual fund investments while considering real-world factors like inflation.

How do SIP Calculators Work?

You can always locate a SIP calculator online, so you don’t have to perform the calculations by hand, but it’s always helpful to know where these figures originate from so you can feel more secure about your investment plan.

A SIP plan calculator works on the following formula –

M = P × ({[1 + i]^n – 1} / i) × (1 + i).

In the above formula –M is the amount you receive upon maturity.P is the amount you invest at regular intervals.n is the number of payments you have made.i is the periodic rate of interest.

Take for example you want to invest Rs. 1,000 per month for 12 months at a periodic rate of interest of 12%.

then the monthly rate of return will be 12%/12 = 1/100=0.01

Hence, M = 1,000X ({[1 +0.01 ]^{12} – 1} / 0.01) x (1 + 0.01)

which gives Rs 12,809 Rs approximately in a year.

The rate of interest on a SIP will differ as per market conditions. It may increase or decrease, which will change the estimated returns.

If you know how much you want to invest in Mutual Funds every month, you can use Megaincomestream’s SIP Calculator to estimate the potential future value of your investments.

To use this functionality, you need to provide 3 key inputs:

Option 1. If You Know Your Investment Amount

If you know how much you want to invest in Mutual Funds every month, you can use the online SIP Calculator to estimate the potential future value of your investments. To use this functionality, you need to enter the following inputs:

• Investment Amount – This is the SIP amount you plan to invest at regular intervals on a specific SIP date.
• Investment Duration – This is the period in years for which you plan to continue your SIP.

After entering the above details in the Mutual Fund SIP calculator, just click on calculate to view the future value of your investments along with a short list of Mutual Funds that might be suitable to help you achieve your investment goal.

Option 2. If You Know Your Investment Goal Amount

If you are planning to invest to achieve a specific goal such as buying a new car or arranging for the downpayment of a new house, you would already know how much money you will need. In this case, you can use the sip amount calculator to figure out the SIP you need to reach your investment goal.

To use this feature of the monthly SIP calculator, you need to provide the following inputs:

• Savings Goal – This is the amount that you have to save to reach your investment goal.
• Investment Tenure – This is the period in years within which you plan to reach the investment goal.

Once you have entered the above details, the SIP calculator will provide the SIP amount you need to reach your investment goal within the specified investment tenure.

You can also use the “Adjust Goal Amount for Inflation” feature and select the appropriate rate of inflation to compute the higher SIP amount needed to reach your investment goal after accounting for the impact of inflation.

Advantages of SIP Calculator

Investors may find it challenging to determine how much their money will grow in the future or how much they need to invest to reach financial goals because investments made into market-linked instruments, like mutual funds, do not guarantee returns.

The SIP Investment Calculator helps investors overcome these challenges and offers the following main benefits:

• Instantly Calculate Investment Future Value: SIP Calculator delivers immediate and precise results, sparing you from number-crunching.
• User-Friendly SIP Calculator: Easily estimate your investment needs with our user-friendly SIP Calculator, suitable for anyone, and it’s completely free and unlimited.
• Empower Informed Investment Choices: Plan your investments effectively with the SIP Calculator, ensuring you meet your financial goals effortlessly.
• Discover Top Investment Opportunities: Unlike others, our calculator not only predicts future values and investments but also recommends funds to align with your goals.
• Inflation-Adjusted Results at Your Fingertips: Combat rising costs by effortlessly obtaining inflation-adjusted investment results with a simple button click, a feature lacking in most SIP calculators.

A systematic investment plan calculator ensures that your savings portfolio is as per your requirements and financial needs.