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Business 161 views Mar 26, 2018
Use sip return calculator to calculate the SIP amount

SIP Return Calculator | Image Resource:

If you invest in mutual funds through Systematic Investment Plan (SIP) then you need to calculate the right amount to invest. There are tools and calculators available which help you to calculate the amount you reach at the end of investment period.

One of the calculator is the SIP return calculator. It can be used to calculate the amount you reach at the end of investment period or the amount on any future date. The inputs to the calculator are the scheme selected, the installment amount, the frequency of installments, the SIP date, from date and to date. The output from the calculator is the final amount as on date. It also gives a graph if the option is selected.

Other tools

There are other tools and SIP calculators available. One of the calculators takes the investment amount per month, the duration in years and expected return on your investments as input. The output is the amount you collect. You can use this calculator to find the amount you need to invest monthly to reach your goal.

Other calculator helps you to find the amount you reach when you increase your SIP amount periodically. The input to the calculator is the monthly investment, the duration of the investment, the increased SIP amount, the frequency of the increased SIP amount and the assumed annual rate of return. The output is the amount you get collect at the end of the time period.

Why SIP?

There are various reason to invest through SIP. They are as follows:

  • As you invest a fixed amount regularly it turns you into a disciplined investor. 
  • As you invest a fixed amount regularly you can buy more units when the market is low and less when the market is high. This brings down the average cost of acquisition of units. It is called Rupee Cost Averaging.
  • SIP supports power of compounding. The longer you stay invested the more the benefits of compounding. In compounding the initial investment earns interest as well as the previously earned interest.
  • SIP is a convenient way of investing as it allows you to invest small amount of money without affecting the household budget.
  • As you invest regularly you need not time the market.
  • SIP is a smart tool as you can break your big amount into small amounts. You can invest the small amounts regularly to reach your goals.
  • SIP offers the flexibility to select an investment frequency based on your convenience and need.