Systematic Investment Plan or SIP is a strategy of investment that allows one to invest a certain amount of money at a regular interval. For instance, you can invest small amounts of money in weekly, monthly or in quarterly basis instead of investing a lump sum in a year. Hence, SIP investment plans are the smart and hassle-free way of investing in mutual funds (or in other investment instruments) to create wealth for future.
Steps to Use SIP Calculator
The SIP calculator uses some key data such to calculate the final value of your investment. Following are the key steps that need to be followed when using the SIP mutual fund calculator.
Step 1. Input the Accumulate SIP amount you are comfortable with.
Step 2. The second variable that is required in case of the SIP maturity calculator is the investment tenure. This refers to the amount of time you want to continue investing. In most cases, SIP schemes have a minimum tenure of 1 year.
Step 3. Estimate the rate of return on your investment. This is definitely not an exact science; however, based on the track record of the fund, you can determine a probable rate of return and input that into the SIP calculator.
Based on the above criteria the SIP calculator for mutual fund provides a final value of your investment at the end of the tenure chosen by you. As the tool is free to use, investors can easily change any of the variables to estimate the different returns that they could receive in lieu of their investment. Currently, these calculators do not take into account either the capital gains tax you may incur or the probable inflation. Hence going forward, the next big step might well be the introduction of a sip calculator inflation option along with the plain vanilla offering.