Best SIP calculator online
Optimize your investment strategy accurately
Expected return rate (p.a.)
*This amount is calculated on 12% p.a. for the span of 10 yrs.
Your returns compared with Univest
SIP calculator – systematic investment plan calculator
Systematic Investment Plan, commonly known as SIP, is a famous investment approach to invest in Mutual Funds. By investing in an SIP, investors can plan their investments by choosing a fixed amount to be invested at regular intervals in various Mutual Fund Schemes. The investment is done periodically, usually with an interval being monthly, quarterly or semi-annually. The mutual fund scheme can also be chosen by the investors, depending on their financial goals and expected rate of return.
What are the types of SIP?
Generally, there are seven types of Systematic Investment Plans(SIPs), which have been explained below:
- Regular SIP: Regular SIPs are one of the most convenient types of SIPs where a fixed amount is invested on a regular basis for the desired investment period. The duration of investment may be monthly, quarterly, or half-yearly.
- Top-up SIP: In this type of SIP, the amount of SIP contribution can be increased periodically, as per the investor’s convenience and financial capacity.
- Flexible SIP: Flexible SIPs provide the flexibility to make alterations to your SIP investment plan. These changes can be in terms of the SIP amount or even the frequency of investment. A flexible SIP helps to increase or decrease the SIP contributions based on market conditions.
- Trigger SIP: These SIPs are for experienced investors who are well aware of the market risks and are comfortable investing during volatile market conditions. It is imperative to note that one must have adequate knowledge and understanding of the market trends to invest in Trigger SIP.
- Perpetual SIP: Perpetual SIP is similar to regular SIP, the only difference being that of a fixed investment tenure. In this type of SIP, one needs to keep investing until the fund house is requested to stop the SIP.
- Multi SIP: Multi SIPs help in the diversification of the funds invested as the money is invested in various sectors. Such diversification allows the risk to be mitigated.
- SIP with Insurance: If an investor is opting for long-term SIP, then some asset management companies provide insurance coverage as an additional benefit. The coverage amount may vary as per the amount invested through SIP. However, this scheme is provided only in the case of equity mutual funds.
Investment process in SIPs
- To begin investing in SIPs, one must choose a mutual fund that aligns with the personal interest of the investor. Some necessary factors to consider before the selection include the financial goals and investment tenure of the SIP. Additionally, the mutual fund should be chosen in accordance with the risk tolerance capacity of the investor. Higher risk can lead to significantly higher returns. However, since many investors are risk-averse, they might prefer mutual funds with comparatively lower risk.
- Once the suitable mutual fund scheme is selected, the investor must decide a fixed amount to be invested regularly, along with the date of investment. This amount is generally invested every month by most investors. Moreover, the SIP amount has no mandates and can be fixed as per the investor’s financial threshold. One can even start a SIP from an amount as low as Rs. 500.
- After these steps are completed, the SIP investment has been done and the amount will be deducted automatically from the linked bank account of the investor.
Advantages of SIPs in long-term investments
- Exponential Growth: The foremost advantage of investing in Systematic Investment Plans from a long-term perspective is that an investor can exponentially grow his wealth due to the benefit of compounding. In simpler terms, ‘Benefit of Compounding’ means that the returns earned from the SIP are reinvested in the SIP mutual fund scheme, which increases the principal amount of investment, thus leading to higher future potential returns.
- Disciplined Investment Habit: Investing in SIPs promotes discipline among investors by inculcating a regular habit of saving every month. Since the SIP amount to be deducted regularly is predetermined, individuals can plan their finances better by reducing unnecessary expenses. This helps in effective personal finance management, while simultaneously contributing smaller amounts for a good amount of target corpus.
- Navigating fluctuations in market trends: Since SIPs follow the principle of Rupee Cost Averaging, investors can easily adapt to market fluctuations. Owing to this principle, more units are allotted when there is a downturn in the market and vice-versa.
- Tax Deductions: Various mutual fund schemes offer tax deduction benefits under Section 80C of the Income Tax Act. Professional Management.
- Professional Management: The mutual fund schemes are managed by experienced professionals, thus relieving the investors stress regarding the choice of portfolio in accordance with potentially maximised returns.
A SIP Calculator is a financial tool available online that assists investors in calculating a close estimate of the returns on investments made in Mutual Funds via SIPs, that is, Systematic Investment Plans. Over and above, it also helps in the calculation of the SIP amount required to be invested each month to achieve the target corpus of an investor. To calculate the estimated returns, the SIP Calculator takes into account the monthly investment amount and the duration of the investment. However, the actual returns of SIPs may vary due to fluctuations in market trends and other relevant factors. For beginner-level investors who arent well-versed with the investment process of SIPs, or lack clarity concerning the returns they would be earning from their mutual fund portfolio, SIP calculators are a reliable source to help them estimate their returns, which otherwise would have been a complex calculation if done manually.
Investors who want to check the SIP returns when they top up their mutual fund investment can also use SIP top-up calculators available online. It will provide a better understanding of the expected return on SIPs.
Components of SIP calculator
A SIP Calculator essentially requires four main details for the purpose of estimation of returns. These are:
- Amount of Investment
- Tenure of Investment
- Frequency of Investments to be made
- Expected Rate of Return on the Investments Done
Benefits of using a SIP calculator
A SIP mutual fund calculator helps investors in various ways such as:
- Estimation of the Returns: As the name suggests, the primary advantage of using a SIP calculator is that it allows the investors to estimate the potential returns they can earn from their portfolio of SIP mutual fund schemes. This will help them make informed investment decisions so they can align their financial goals accordingly.
- User-Friendly Interface: Only a few details are required as input to determine the SIP returns, such as the amount of SIP, rate of return and the tenure of investment. This makes the interface easy to use as there are no technical terms required for the calculation of SIP returns, thus enabling all individuals to make use of it.
- Better decision making: There are some of the best SIP calculators available online that help you estimate your returns on SIP, thus assisting in better investment decisions.
- Comparison of SIPs: SIP calculators allow investors to compare the various SIP schemes available, thus helping them to make appropriate choices based on their goals and convenience.
How it works?
How to Use the SIP Calculator:
Estimated amount of returns = Principal amount invested * [(1+ Rate of Interest)*Frequency of Investment-1]/(1= rate of Interest)
To use the SIP calculator, follow the below-mentioned steps:
- Open a SIP calculator on your mobile or laptop.
- Enter the required details including the amount you want to invest in the SIP, the tenure of investment and the frequency at which you would like to invest (intervals).
- Set the Rate of Interest.
- Once all the details have been entered, click “Proceed/Calculate”.
Following these, the expected return on your SIP investment will be reflected on your screen.
Tips for maximizing returns from SIPs
- Increasing SIP amounts: By dedicating more amounts to the SIP mutual fund scheme, investors can exponentially maximise their invested funds with the help of the Rupee Cost-Averaging principle.
- Preventing withdrawals: Unless urgently required, prefer not to withdraw your funds early as this will reduce the principal amount and thus, a smaller portfolio.
- Regular Portfolio Reviewing: Once invested in a SIP Mutual fund, it is imperative to keep track of the portfolio performance. In case a mutual fund has been underperforming consistently for the past few years, consider withdrawing your funds from it and investing the funds in a top-performing mutual fund instead.
- Invest despite market fluctuations: Sometimes the market might take a downturn, leading you to stress about the risks associated with the invested funds. However, take advantage of such fluctuations by purchasing more units of the fund. It is important to note that the risk taken must be calculated and in accordance with your risk appetite.
- Invest for the long term: Systematic Investment Plans are often beneficial for longer tenures of investment. It is advised to consider investing in SIPs from a long-term perspective rather than prioritising short-term gains.
Strategies for different investor profiles:
Since all individuals have differing risk tolerance, their investment strategy has to be different too. Following are some of the common strategies implemented by various investor profiles:
Risk averse investors:
- Since such types of investors prefer lower risk, they can consider investing in Large-Cap equity funds as those have a stable track record.
- They should prefer investing in funds with a positive historical performance to be rest assured.
- Investment in stocks with fixed-income assets can be a safe choice for risk-averse investors.
Investors with moderate risk capacity
- Investors having moderate tolerance of risk must include a balance of small-cap, mid-cap and large-cap funds to ensure stability while including a moderate level of risk.
- Reviewing the portfolio and reinvesting in case of any potentially higher risks can also be a safe decision.
Risk tolerant investors
- Since they have a high level of risk tolerance, they can consider investing more in small-cap funds and aim for maximised growth potential.
- They can even consider investing in international funds,
Risk management in SIP investments
Investments always have some risks associated with them. While these risks can not be completely eliminated, they can be managed by:
- Awareness of Market Trends: To ensure risk minimization, investors must ensure that they stay well informed of the fluctuating trends in the market, and make required decisions accordingly.
- Mindful Selection of Mutual Fund: The most important factor to manage risk is to choose a mutual fund scheme with risk as per one’s risk tolerance. For risk-averse investors, it is preferable to invest in mutual funds with lower levels of risk. Moreover, one must analyse the past performance of the fund to have a better outlook of the fund before investing.
- Diversification is the key: Diversify your portfolio by investing in different sectors or asset classes. This is because if one sector is underperforming, another sector might be performing well, thus offsetting the losses.
- Seeking Professionals: If you are unable to make informed decisions regarding your investment strategy, you might consider seeking advice from finance experts who have more knowledge and experience for effective guidance.
In conclusion, Systematic Investment Plans (SIP) can provide numerous benefits to beginner-level investors as well as experienced investors. Investment in SIPs can help individuals achieve various goals by maximising their wealth with small yet regular contributions for a longer tenure of investment. Depending on one’s financial goals, risk appetite, and time horizon, one can choose suitable SIP plans that align with his preferences. With its immense convenience, the evolution of SIPs has brought about a phenomenal change in the investment patterns of investors as they move ahead towards a financially secure future!
What is a SIP and how does it work?
How accurate is the SIP calculator?
Can I adjust my SIP investment amount over time?
What factors should I consider when setting the expected rate of return for SIP?
How does a SIP help in managing market volatility?