SIP Calculator
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SIP Calculator – Systematic Investment Plan Calculator
SIP Calculator is a Financial tool that helps Investors to calculate the possible returns on their Mutual investments made through a systematic investment plan. Recently, SIP has Become most of the most popular ways to Invest Money as it doesn’t require Investors to invest a lump sum amount upfront.
People can start investing in small amounts and then gradually increase their Investments. SIPs help investors in Building a Declipliend Investing Habit. Investing for a longer period, the Investor can take advantage of the power of compounding.
A SIP Calculator can be a valuable tool for someone who is planning to Invest in Mutual funds and set realistic goals. This SIP Calculator of Mutual Funds will help the investor calculate wealth gain and expected returns for Their monthly SIPs.
However, Mutual Fund SIP Calculator only Provides an approximate figure Based on the Input Provided by the User. The Mutual funds are Subject to Market Risk and actual returns may vary and May Not be similarly Shown in the Tool.
What is a SIP or Systematic Investment Plan?
SIP Stands for Systematic Investment Plan. It is a method of Investing in Mutual funds where the Investor Invest a Fixed amount of money (As Low as 100 Rupees) every Month. SIP Allows the Investor to Invest in Small Amounts of Money for a Longer period and This regularity Helps Investors to be More Disciplined.
Since the Investor is Investing the same amount of money regularly, they can buy more units when prices are low and fewer units when prices are high. This average helps them overcome market volatility. Over the longer period, the returns earned on investments start generating more returns. This compounding effect can significantly improve the growth of investment.
How Does a SIP Calculator Work?
The SIP Calculator uses a Mathematics Formula to find out How Much the Invested amount will Grow with a Systematic Investment Plan (SIP). This Formula is based on the concept of compounding interest. Below Mentioned is the Formula Used by SIP Calculators to find the Future Value.
M = P × ({[1 + i]^n – 1} / i) × (1 + i)
Where,
- M = Future Value of the investment after n periods
- P = Regular investment Through SIP
- i = Periodic interest rate
- n = Total number of compounding periods
For Example,
You have invested Rupees 1000 Per Month For 1 year at the periodic rate of interest of 12%
- Investment Amount (P): Rs. 1,000 per month
- Periodic Interest Rate (r): 12% per year, which is 0.120.12 in decimal form
- Number of Compounding Periods (n): 12 months
M=1000×(0.01(1+0.01)12−1)×(1+0.01)
Calculating the expression (1+i)n−1/ i
1.12682503013−1/ 0.01 = 0.12682503013
Calculating 1+i : 1+0.01=1.01
M=1000×0.12682503013×1.01=12809
Therefore, after 12 Months You Invested Amount will become 12809 (Approx)
Benefits of Using a SIP Calculator
Wealth Leap Offers one of the Best SIP Calculators that helps individuals to make better financial Dicison and strategize their investments wisely. Below Mentioned are the Five Benefits of Using a SIP Calculator.
- Ease of Use: Calculating the future value of your investment manually can be an incredibly time-consuming process. SIP calculators are user-friendly tools available online. You just have to Input the Values Like SIP Amount, Expected returns, and SIP Tenure to Find an Estimate Value of Your Investments.
- Accurate Projection: Our SIP Calculator uses mathematical Formula Like compound interest formulas to provide accurate value of the future value of your investments. By applying these mathematical formulas to the regular contributions made through a SIP, the calculator offers a clear picture of Investments Growth.
- Goal Planning: The Wealth Leap’s SIP Calculator is a Great Tool for goal-based planning. Whether You are Planning for a New card, House, or Saving for Your child’s Future, you can use the calculator to achieve your financial goals.
- Customization: Investors can Customize their Investment value and Adjust them according to their investment preferences. You can change the Amount, Tenure, or Rate of Interest to find out how different situations will impact the overall value of Your Investment.
How to Use the SIP Calculator
To Use the SIP Calculator Follow the steps mentioned below.
- Open a SIP calculator tool provided by Wealth Leap.
- Enter the Details like the amount You want to Invest, the frequency of investment, the expected rate of return, and the investment term.
- Double-check all the details entered and Click on the Calculate Button.
- Analyze the Generated Results and plan your Investment accordingly.
SIP Vs Mutual Fund
SIP and Mutual funds sound similar but both have characteristics and serve different objectives. Mutual funds refer to the investment products themselves, while SIP is a method of investing in mutual funds. Let us Understand Both SIP and Mutual funds in Detail.
What is SIP?
SIP Stands for Systematic Investment Plan. SIP is a way of investing, where a Person Invests a fixed amount of money every Month. This process helps them to develop a disciplined savings practice. Also, when an Individual Invest a Fixed amount per Month, they are less affected by market changes.
What are Mutual Funds?
Mutual funds are investment vehicles that pool money from numerous investors. These funds are Handled by Professionals Known as Fund Managers. Each investor in a mutual fund holds shares, which represent a portion of the fund’s holdings. The profits earned from investing together in the mutual fund are divided among all the investors.