For most of us, mutual funds investments mean investment through a SIP (Systematic Investment Plan). A SIP is the process through which we invest a fixed amount of
money in a selected mutual fund scheme at regular intervals for a fixed period.
If you are planning to invest in SIP, a Mutual Fund Sip calculator is the ideal
tool to use to plan your investments.
What is a SIP calculator?
A Mutual Fund SIP calculator is a convenient tool that allows us to calculate the
tentative returns from our mutual fund SIP investment. For investors who are
relatively new and testing the waters, a mutual fund sip calculator offers an
estimate on the profits from the venture.
The returns calculated using a Mutual Fund SIP Return calculator are just an
estimate and not an exact value as various forces operating in the market are not
considered for calculation. The SIP calculator does not consider factors such as
expense ratio and exit load, which are an inherent part of the SIP for Mutual
Fund.
The rough estimate provided by the SIP calculator for mutual funds is based on
an estimated annual rate of return.
If, however, you wish to invest a lump sum amount in mutual funds through a one-
time payment the Lump-Sum SIP Calculator would assist you in calculating the
estimated maturity amount based on the single lump-sum payment.
How does a Mutual Fund SIP Calculator works?
A SIP calculator provides results based on the values entered by the investor. You
need to enter the investment amount, period of investment, expected rate of
returns, and the percentage of the inflation adjustment to get the desired
information.
The calculation in the Mutual Fund SIP return calculator uses the compound
interest formula for calculating results.
A Mutual Fund SIP calculator is based on the following formula.
M = P × ({[1 + i] n – 1} / i) × (1 + i)
Where,
M is the maturity amount calculated
P is the fixed amount invested at regular intervals.
n is the total number of SIP instalments made by you
i is the rate of interest.
Let us understand this formula with the following example.
If for instance, P =Rs. 1,000( SIP instalment every month)
N=12 months
I=12%
M = 1,000 X ({[1 + 12%]12 – 1} / 12%) x (1 + 12%).
M = Rs. 25,293 (an approximate value based on the inputs entered.)
However, the interest rate or rate of returns on a SIP varies with the changing
market conditions and does not remain fixed for an extended period.
Why should we use SIP Calculator?
When we talk about a Mutual Fund SIP calculator, we must understand the
benefits of investing in SIP mode compared to a lump sum mode of investment.
Investment in SIP mutual fund has the advantage of rupee cost averaging which
allows an investor like you to accumulate more units of the fund when the unit
price is low and lesser units when the unit price is high.
Hence, when you use a SIP calculator online to get an estimated maturity value of
your SIP investment, you become eligible for the following benefits:
1. The SIP calculator provides an estimate of the tentative maturity value.
2. You can decide the investment amount based on your financial goal.
3. The calculator gives the total amount invested over a given period.
4. Based on the maturity value, you can select the appropriate mutual fund
scheme to meet your future financial goals.
How To Use the Sarsa Sip Calculator?
The Sarsa Sip calculator is an easy and user-friendly tool designed for investors
like you. Enter the savings amount (in rupees), Investment period (in years), expected rate of return (in percentage), and the inflation adjustment (as apercentage) and click on calculate to get the estimated maturity value.
Using the mutual fund SIP calculator ensures that you get an idea of the tentative
maturity value and plan your investments as per your future financial goals and
requirements.
If you feel you need further assistance, Sarsa is always there for you. Get in touch with us and we will help you solve your confusion.