Proper planning can make or break your investment. This is especially true when it comes to SIP investments. There are four numbers that you have to keep in mind when you deal with SIP planning – the corpus amount you wish to create, the returns of the fund, the instalment amount you can afford every month, and finally, the tenure of your investment. But how do you ensure your numbers are on point when the calculation is this complex Systematic investment plan (SIP) calculator is a tool that can help you here. Let us learn more about investment planning and see how the SIP calculator can help with the same.
What is SIP?
A SIP is not an investment option but a tool that will help you invest in mutual funds. The default method of investing in mutual funds is investing in a lump sum. Lump sum investments are usually made either to protect the capital or to appreciate the same. At the same time, there is a misconception that lumpsum is the only way of investing in SIP. But what if you don’t have a corpus and want to create one from scratch?
SIP is an investment tool that is beneficial here. It helps you create a corpus with smaller investments every month. Moreover, you don’t have to worry too much about timing the investment. The same makes SIP an ideal option for both beginners and experts.
But since SIPs are done for a longer period, there needs to be an advanced level of planning. The SIP calculator is a tool that helps with the same. Let us learn how a SIP calculator
What is a SIP calculator?
As mentioned above, there are four factors to consider when you are planning a SIP investment.
- The goal amount that you want to create by investing in the fund.
- How long do you want to stay invested, or at what time do you want to achieve your goals?
- The amount of money that you plan to invest every month.
- The mutual fund you want to invest in and the same average returns.
Here, you should choose the four options in a way that will work for you.
For instance, if the desired corpus you have in mind is Rs.5 lakhs, you have shortlisted a fund that gives returns of 10%, and you give yourself a tenure of 5 years to make money, you can use the SIP calculator to find the ideal monthly instalment amount.
Here, when you use a SIP calculator, you can find out that investing an amount of Rs.6500 in a fund that gives 10% returns for five years will give you a corpus that is slightly more than Rs. 5 lakh.
Similarly, in a situation where you have a monthly instalment amount that you can afford, a fund that you have chosen, and the desired corpus amount, you can use the SIP calculator to find the time it may take for you to reach the desired corpus.
SIP calculators are an amazing tool that helps with investment planning. At the same time, some of the factors involved, including the average returns that the fund gives, can change according to market conditions. Hence, it is a wise idea to ensure you stay up to date with the happenings in the stock market and make changes wherever required.