SIP Calculator – Calculate Returns for Mutual Funds SIP Investment
Parameters used in a SIP Calculator
1: Investment amount per month?
A: This is the amount that will be invested every month. For example: If a SIP of ₹ 5,000 per month is set, then the calculator will assume that every month a total of ₹ 5,000 will be invested in the given mutual fund(s).
2: The Total Number of Payments?
A: This is known as the tenure for the mutual fund SIP; the total number of payments you are planning to invest in a SIP. For example: If you are choosing 24 payments it means you are investing a certain amount for 2 years every month.
3: Expected annual return?
A: Annual returns are the return that is expecting from the investment on yearly basis. However, it’s not possible to know the exact return, but as a reference, the historical returns percentage can be used. The number can be fluctuated just to check the total value in the different scenarios. For the benchmark – a fixed deposit would give annual returns of 6.5%*.
About Systematic Investment Plans (SIPs)
Systematic Investment Plan, commonly known as a SIP, is a disciplined investment strategy that helps in building your wealth over a long-time period. It is an economical way of investing a fixed amount for a continuous period in a mutual fund at regular intervals. Mainly it helps you in two ways. Here:
1: Rupee Cost Averaging: Rupee cost averaging is an approach wherein you invest a fixed amount at regular intervals. This ensures that you buy more shares of an investment when the prices are low and vice-versa.
2: Compounding: Compounding refers to the increasing value of an asset due to the interest earned on both accumulated interest and a principal. This phenomenon is also known as compound interest and it works on both assets and liabilities.
NOTE: Kindly note that any amount in future will be of less value as inflation would act upon regarding the same.