5 Reasons why you should use a SIP calculator before SIP

SIP is a convenient method of investing a fixed amount in the mutual fund market regularly every month, week, or quarter, depending on the preference, convenience, and fund choice. 

SIP calculator

A SIP return calculator or SIP calculator is a simple digital tool that allows potential investors and investors to fathom the progress of their ongoing investments and a hint about future outcomes.  This tool offers an easy error-free estimation of MF investments. 

It calculates the expected returns and gains depending on the data provided regarding the scheme, investment amount, and tenure, depending on an estimated annual rate of return. However, a SIP return calculator never clarifies the consideration of expense ratio or entry load wherever it’s applicable. 

The working strategy of a SIP calculator

Any standard SIP calculator works on a particular formula:

M = P [{(1+i)/n-1} x (1+i)], where “M” stands for the maturity amount; “P” stands for the regular investment amount; “n” stands for the total number of payments made; and “I” stands for the periodic interest rate. 

How to use a SIP calculator

Any SIP calculator is very user-friendly. It requires just a few simple clicks and taps to receive the desired results. The user must enter the investment amount, interval, and tenure along with the expected return rate. 

Once all the details are entered, the tool will automatically reveal the results in no time. 

Advantages of using a SIP calculator

This handy digital tool comes with a host of advantages. It is becoming all the more indispensable because of the rising trend of mutual fund investments. Some of the major benefits of a SIP calculator include the following:

1. Offers accuracy

Since this is an automatic digital tool, it minimises the risk of any human errors and the results revealed are accurate and error-free. It aids the user in an easy extrapolation of data for an enhanced span without altering the base returns, negating the probability of mistakes. 

2. Offers rapid results

A SIP returns calculator is capable of delivering instant results once all the relevant details are entered. The user does not require to spend any waiting time to know it; it is revealed in a flash second. There is no risk of any error. Once all the details are fed, based on the standard formula the results are calculated and revealed instantly. 

3. Encourages to make informed decisions for the investor

Maintaining a proper and satisfactory investment portfolio is a tough challenge and requires critical speculation. Depending on the income status, investment tenure, financial targets, and market conditions, this portfolio always differs from one investor to another. 

Here, a SIP calculator plays a significant role by simplifying complex calculation procedures and negating the possibility of errors. It offers a tentative estimation of the returns once the SIP tenure, the amount along with the expected return percentage is entered. 

If the results seem inadequate than the target corpus, the SIP amount can be increased or the tenure, and in certain other cases, it can be decreased too, depending on the circumstances. These SIP calculators allow any investor to make informed investment planning and befitting execution for easy target accomplishments. 

4. Comparison and selection

A standard SIP calculator even reveals the probable outcome of every individual scheme once the past returns of various SIP schemes are entered individually. This automatically reveals the best, fair, and worst-performing schemes and keeps the concerned investor updated about the overall performance, revealing the best suitable scheme(s). This significantly enhances the scope of maximising the expected returns and gains. A comparative study among different schemes is always suggested before any investment. 

5. Free accessibility

Any SIP calculator is readily available on the digital platform absolutely free of cost. It can be easily accessed and there exists no restriction on its usage. It can be accessed and used for free without any constraints. This particular feature makes it all the more popular especially under the current circumstances. 

Conclusion

This comprehensive guide highlights the important aspects of the SIP calculator. For using any SIP, it is best and always advised to invariably utilise the fine features of this handy tool to make wise and informed moves in the investment market, ensuring better portfolio management. 

Also read – What Is Meant By Applied Quantum Computing?

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