A SIP Calculator stands for Systematic Investment Plan Calculator which is a simple but very powerful financial tool. It actually helps the investors to estimate the future value of their mutual fund investments. It also allows you to calculate how much wealth one can accumulate in a period of time by investing a fixed amount regularly in a mutual fund scheme.
By providing useful data into the future value of investments based on regular contributions, expected returns and the specific tenure, an SIP calculator simplifies financial planning. This is an effective way of making money over the years. It is a passive approach to earn compound money over the years without knowing anything about the market.
To use a SIP calculator, just enter 3 main inputs which are the monthly investment amount, the investment tenure (in years) and the expected rate of return.
Then, the calculator will display the total invested amount, the estimated returns and the maturity value at the end of the chosen period.
In simple words, enter these details:
All the mutual fund companies will take the money from the interested investors and invest their money into the market. The customers do not have to care about the market fluctuations. These investments are considered to be the best suited for long term investments as it helps the customer to earn maximum Compound Interest.
An SIP calculator uses the following formula to determine the maturity amount:
FV=P×(1+r)n−1r×(1+r)FV = P \times \frac{(1 + r)^n - 1}{r} \times (1 + r)FV=P×r(1+r)n−1×(1+r)
Where:
SIP is a one of the best options to start investing for those who want to invest in certain scheme which can give him better return after a fixed time period. As SIP pays off high returns in the long term with the guarantee of substantial growth in investments and involves fewer market risks as compared to other equity investments.