Make your investment strategy with the help of a mutual fund SIP calculator

A Systematic Investment Plan or SIP can be a simple and convenient way to invest in mutual funds, allowing you to set aside money in easy instalments over a tenure of your choice. Over time, a slow, steady, and disciplined approach can help build a substantial corpus, especially if the markets are doing well.
However, when you embark on your investment journey, it may be hard to visualise how a small investment may pay off in the long run. It may also be difficult to ascertain what kind of mutual fund to choose, how long to put in money for, and what SIP amount would help you meet your goals.
This is where a mutual fund SIP calculator online can help. The calculator determines the final value of your investments within seconds based on the instalment amount, tenure, and estimated rate of returns. This article tells you more about how to make optimal use of an SIP calculator.

• Table of contents:

1. How does an SIP investment calculator work?
2. How do I determine the estimated rate of return?
3. Why should I use the calculator?

How does an SIP investment calculator work?

Bajaj Finserv Asset Management Ltd. offers a free online. Enter your instalment amount, the investment period, and the expected rate of return. Based on these figures, the calculator will work out your total investment value.
Let’s take the help of an example to know more about how to use an SIP calculator.
Let’s say you have decided to invest Rs. 1,000 per month for 10 years and expect a 10% rate of return. When you input these figures, the SIP calculator online will show you that will earn Rs. 2,06,552 on your total investment of Rs. 1,20,000. This comes to an absolute growth of Rs. 86, 552. (For illustrative purpose)
However, it’s important to note that these figures are estimates and your actual returns will depend on the market performance and the fees charged by the asset management company, among other things.

How do I determine the estimated rate of return?

The returns you get on your investments depend mainly on market trends, which is why all market-based investments carry an element of risk. However, historical data can give you an idea of what you can expect over a similar timeframe. Keep in mind that markets tend to be more volatile in the short term (less than three years) and relatively stable over longer horizons of seven to 10 years.

Why should I use the calculator?

When you invest small amounts, it may be difficult to envision what the eventual corpus would look like. Having an estimate, even a rough one, can help you determine how much to invest or what duration to look at.
A mutual fund SIP calculator can also help you decide your instalment amount or tenure. Are you saving for retirement? If so, your tenure would likely be longer, and you can choose smaller instalments. If you’re looking at a seven-year horizon, for your child’s higher education, for instance, you may need a slightly higher instalment amount. Conversely, if you know the amount that you can set aside, you can use the SIP calculator online to determine how long you should stay invested to meet your goals.
Trying different combinations of tenures, instalments and rates of return may also help you decide the type of fund to go for. If returns are your priority, if your risk appetite is relatively high, and if you are investing over a longer tenure, you can choose an equity-heavy portfolio. If your investment horizon is three years or lesser and you want relatively steady returns with less volatility, you may prefer a debt fund, which invests in fixed-income instruments such as bonds. There are several other mutual fund types as well based on asset class, risk levels, the size of the companies they invest in, the investment duration and much more.
By comparing different fund types and rates of returns, the calculator can also help you decide how much you want to invest in mutual funds and how much you’d prefer to keep in low-risk instruments such as provident funds and fixed deposits or in fixed assets such as real estate.

Conclusion

A mutual fund SIP calculator can help you plan your investments better by giving you an estimate of the future value of your savings. However, it’s important to keep in mind that these figures are estimates and actual returns depend on several factors, including market trends.

FAQs

What is a mutual fund SIP calculator?

A mutual fund SIP calculator is a tool that helps you calculate potential future value of your mutual fund investment. It takes into consideration factors like investment amount, duration, and expected rate of return.

How can a mutual fund SIP calculator enhance my investment strategy?

Using a SIP calculator enables you to experiment with different investment amounts, durations, and growth rates. This empowers you to create a more informed investment strategy aligned with your financial goals.

Is a mutual fund SIP calculator accurate?

While an SIP calculator provides estimates based on inputs, the actual returns may vary. It's a useful starting point, but market fluctuations and fund performance can impact actual results.

Can an SIP calculator help me choose a suitable mutual fund scheme?

An SIP calculator primarily focuses on estimating the future value of your investment. For choosing a suitable mutual fund, consider factors like risk tolerance, and investment objectives.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. This document should not be treated as endorsement of the views / opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.