When it comes to mutual fund investing, most Indians prefer the systematic investment plan or SIP route due to its convenience and disciplined approach to investing. But before embarking on the investment journey, most investors use SIP calculators to estimate potential returns, compare mutual fund schemes, and plan their investment strategy to perfectly align with their financial goals. This article outlines the chief features of an SIP calculator that help it stand out.
What is an SIP calculator
An SIP calculator is a digital tool that allows investors to estimate the future value of their MF investments made through monthly, quarterly, or annual SIP contributions. By inputting the investment amount, duration, and expected return rate, you can easily determine the projected corpus at maturity. SIP calculators simplify complex calculations to offer clear estimates of your projected corpus. A clear understanding of the potential corpus growth helps investors design their MF investment strategies and make informed financial decisions.
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Features that make an SIP calculator stand out
SIP calculators are indispensable tools in financial planning. Here’s a list of features that make an SIP calculator stand out:
User-friendly interface
Ease of use makes an SIP calculator stand out. Most SIP calculators have an intuitive interface with simple and clear input fields for various parameters like the investment amount, tenure, and expected return rate. Apart from simplicity, the best SIP calculators from mutual fund houses, NBFCs, and aggregator websites are completely free and easily accessible to all.
Accurate and instant results
Reliable SIP calculators forecast the growth of your investment based on the investment parameters specified. SIP calculators accurately compute the compounding effect on the investment to estimate your total corpus value post the given investment tenure. While calculating returns and corpus growth manually may result in errors, SIP calculators have a high rate of accuracy that allows you to undertake financial planning without any worries. Moreover, these calculators use mathematical algorithms to complete complex calculations in seconds and produce results instantly to avoid unnecessary delays.
Visualisation representation of potential returns
Another standout feature of an SIP calculator remains its ability to represent potential returns visually. The best SIP calculators help investors see how their money will grow vis-a-vis the given parameters through graphs and pie charts. Visual representation makes it easier to understand complex compounding data, helping investors make informed choices. With charts and graphs to sum-up wealth growth estimates, investing becomes as easy as shopping at an online marketplace.
Flexibility to run multiple scenarios
With an SIP calculator at your disposal, you can run multiple return scenarios. SIP calculators let you input different investment amounts, expected return rates, and tenures to understand how your estimated returns change. You can conduct a comparative assessment of multiple investment scenarios to fine-tune your investment strategy, select the right funds, and decide the correct investment duration.
Possibility of goal-based planning
The best SIP calculators also allow investors to set specific goals and plan investments accordingly. By inputting your financial goal and expected rate of return into the calculator, you can determine how much you need to invest monthly to reach this goal within the set time horizon. For instance, if you are investing to purchase a home in the next 5 years, you can enter the target amount, time horizon, and expected return into the calculator to estimate the required monthly contributions.
Step-up feature
Some SIP calculators standout by virtue of their step-up feature. The step-up feature allows you to estimate investment growth if you annually increase your SIP contributions. Incrementally increasing your contributions in alignment with your income growth helps accelerate wealth accumulation while also helping you stay ahead of inflation.
Conclusion
The efficiency, accuracy, and accessibility features of SIP calculators play a vital role in helping them stand out as effective tools of financial planning. With free SIP calculators online, you can easily compute returns by inputting the investment amount, tenure, and expected return rate. Moreover, you can run multiple simulations with altered variables and step-up options to understand how your corpus will grow over time.
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