How to invest in mutual funds using SIP calculator?

All of us invest a part of our hard-earned money in some or the other saving instruments like the FD, RD, NSC, etc. The most popular among them is the Systematic Investment Plan or SIP.

Systematic Investment Plan or SIP is a mode of investing money in the mutual funds in a smart and convenient manner. Investors call it a revolution in the field of investment plans. It is one of the most baffling investment plans. Generally, the new investors are quite cautious of using SIPs because of the confusing nature of these investment plans. Many times it is seen that even the experienced players in this field who have the right knowledge of the SIP calculator, struggle hard in getting their strategy right. Such is the nature of the SIPs.

Increasingly, people all over the world are getting attracted towards investing in SIPs as they promise much higher returns even for the small amount of money invested. Another reason for the increasing popularity of the SIPs is the ease in investing in these mutual funds. SIP calculator plays an important role in helping the investors to know the returns.

This post will tell you about the basic principle on which the SIPs work and how you can calculate the installments and the returns using the SIP calculator.

SIP Calculator

If you want to be successful as an investor then you have to disciplined and focussed in managing your finances. It is important to have systematic financial planning along with financial prudence. SIP calculators have an essential role to play in making your investment a success.

What is a SIP calculator?

It is a tool which helps an investor to make an estimation of the returns he/she would receive after investing the targeted amount. Also, if you already have a financial goal in mind then SIP calculator will help you find the amount to be invested at regular intervals in order to achieve your intended targets.

How to use the SIP calculator?

You will be needed to have some data in hand while using the SIP calculator. Experts suggest these 3 simple steps in order to use the SIP calculator successfully and efficiently.

Step 1: When you start using the SIP calculator it will ask you the amount you can invest on a monthly basis. Be aware of the minimum amount that needs to be invested. For mutual funds, it is INR 500 monthly and for some other funds, it may be up to INR 1000 monthly.

Step 2: Now you can calculate the expected rate of return for the invested amount of funds. The SIP calculator estimates the possible returns on the basis of the past performance and track record of the mutual funds.

Step 3: In the next step you have to decide the investment tenure of your funds. Here you can decide the time for which you want to remain invested in the scheme.

Online websites like policybazar.com, moneycontrol.com, upwardly.in, etc. provide free tools known as SIP calculator. You can use them anytime you want and can see the expected results for different variables.

Another important point to keep in mind while using any SIP calculator is that you should make sure that it takes these two parameters into account – inflation and capital gains tax.

Benefits of using a SIP calculator

  • SIP calculator can save much of your time by giving accurate results and that too within seconds.
  • They simplify the tedious and lengthy calculations.
  • SIP calculator works on a user-friendly interface and uses a few numbers of variables to give the required results.

If you too are planning to invest in a SIP then use a reliable SIP calculator to know your probable rate of returns.