With the boom in financial education and the need to safeguard the future, investments are increasing daily. People have started understanding the importance of early investments to reap their benefits in the future. This is why they’ve started exploring different investment options. Even youngsters have become so aware that they’ve started educating themselves and investing their money early. As India is still a growing economy, it’s difficult for everyone to have massive amounts to invest, which is why SIP (Systematic Investment Plan) can be a good way to start investing early. Today’s consumers are well aware and informed and don’t purchase anything without thorough research. This is why SIPs came up with SIP calculators, which estimate what returns one might expect after investing. In this article, we’ll cover the benefits of a SIP calculator, but before that, it’s crucial to understand what it is and its features.
What is an SIP calculator?
The SIP calculator is a tool that helps investors estimate the returns they might earn after investing in a mutual fund through a SIP. The calculator divides the future value of a SIP investment into two parts: estimated returns on the investment and total invested amount. However, it’s essential to understand that this tool only estimates the returns from a mutual fund investment, not the actual returns one will get. This is because actual returns depend on various other external factors, which these calculators don’t consider. Factors like market fluctuations, economic conditions, exit load, fund management fees, tax effects, and regulatory changes can impact the SIP investment’s performance. As mentioned above, they help estimate expected returns, which helps compare a fund with various other funds.
Features of an SIP Calculator
SIP calculators are essential tools for quickly estimating an SIP investment’s return. The features mentioned below might help you further understand what makes them more than just a tool for estimating a SIP’s return.
● No Costs
The calculators can be accessed without paying any fee or charge. They’re available online and can be easily used to make any SIP investment decision based on the estimated return.
● Saves Time
The formula for calculating an SIP’s return is quite complex and time-consuming. However, with a SIP calculator, one can quickly get an estimated return by entering the investment’s principal amount, interest rate, and tenure.
● Intuitive Interface
The calculators have a pretty intuitive interface, making them easy for beginners and even experienced investors.
● Easily Adaptable
SIP calculators work for all types of mutual funds, making it easy to understand how much money one can make from a specific investment. Investors can use a mutual fund app to invest in mutual fund SIP.
● Estimate Return
SIP calculators provide an estimate of the return from an SIP investment. This can be obtained by entering essential details like principal amount, interest rate, and investment tenure.
Benefits of Using an SIP Calculator
After covering the calculator’s features, let’s understand its benefits. Calculators provide several benefits other than just estimating the returns of an SIP, which are mentioned below.
● Simple Interface
The calculator’s interface is quite simple and includes only 3 elements: principal amount, tenure of investment, and rate of return. This helps even beginners understand and get an estimate of returns quickly.
● Easily Accessible
The calculators are pretty easily accessible as they only need an internet connection. You can use them on your laptops as well as on your smartphones.
● Free of Cost
Apart from being easily accessible, the calculators are free of cost as they’re available online. One doesn’t need to pay any fee to calculate the estimated return on their investment. Also, one can use it as many times as required to compare various SIPs.
● Quick Estimates
The SIP calculator gives a quick estimate of returns because of the straightforward interface and internet speed.
Conclusion
SIPs are considered one of the finest investment options because of the low initial investment requirement. One of the important tools that helps them in making SIP investments is the SIP calculator. It helps to estimate the returns one might expect from an SIP. This helps in getting quick estimates and comparing various SIPs. However, a single tool isn’t enough to make crucial investment decisions. So, it’s essential to consider other factors that might affect the investment decision. Also, research about different SIPs is important. As every investor’s goals and risk-taking ability differ, conducting individual research to make informed decisions becomes important.
Note: Views and opinions contained herein are for information purposes only and should not be construed as investment advice/ recommendation to any party or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising from the use of this information. The recipient should exercise due caution and/ or seek professional advice before deciding or entering into any financial obligation based on information, statement or opinion expressed herein.
Past performance may or may not be sustained in future. Mutual Fund Investments are subject to market risks; read all scheme-related documents carefully.