Do you dream of financial growth and security through investing in a Systematic Investment Plan (SIP)? While SIPs are a secure way of investing your money with a good return, it can be challenging to estimate the rate of returns on your plan. And estimating the rate of returns on your investment is crucial for making informed decisions.
This is where the SIP return calculator comes in. The SIP calculator gives you an accurate idea of the returns you can get from a SIP investment.
Read this article to discover how to use this ultimate tool and make smart financial decisions.
How Does a SIP Return Calculator Work?
SIPs involve investing a certain amount at regular intervals. A SIP return calculator helps you understand how much of a return you will get over a specific period. It uses the following mathematical formula:
M = P × ({[1 + i]^n – 1} / i) × (1 + i)
The M here refers to the amount received on maturity, P is the amount invested at regular intervals, n is the number of payments made, and i is the interest rate.
To understand the calculation, let us take an example. Suppose you are investing ₹2,000 every month for 24 months. Your interest rate is 12% (i.e., 1% every month). So, your maturity amount would be ₹53,946.
This means by investing ₹48,000 over the course of two years; you will get a return of approximately ₹5,946.
How to Use a SIP Return Calculator?
Using the SIP calculator is hassle-free. You don’t need to know any of the formulas mentioned above. All you need is to go to an online SIP calculator, put in the amount you intend to invest every month or quarter, enter your expected rate of return, and add your investment duration.
And the calculator will show you the future value of your investment instantly!
You can change the values (SIP amount, rate of return, and duration) to calculate the returns on different plans.
It is important to note that the interest rate can change as per the market conditions. This means that the future investment value shown by the SIP calculator is only an approximate amount. Your actual investment returns will be subject to market fluctuations.
Features of a SIP Return Calculator:
Here are some of the SIP calculator’s features that make it a perfect tool to check your investment returns.
Accurate Results
SIP calculators provide accurate estimates of your investment’s future value. They use a precise formula and your inputs (investment, rate of return, and duration) to generate accurate results.
Easy to Use
It is incredibly easy to use a SIP return calculator. They are straightforward and have clear instructions. All you need to do is add your invested amount, the rate of return you want, and your investment duration. And the calculator will show you the future investment value.
Inflation Adjusted
Many SIP calculators come with a feature of inflation adjustment. They provide a more accurate estimation of your investment by factoring in inflation. So, you can learn whether your returns will outpace inflation or not.
Quick Results
Another feature of SIP calculators is that they provide instant results. As soon as you enter your information, the calculator will automatically show you your result. Many calculators also show results using interactive charts and visuals.
To Sum Up:
With features like instant returns, easy-to-use, and interactive graphs, a SIP return calculator is your best solution while investing in SIPs. You can check the results of your investment plan on the calculator. In addition, you can easily adjust your investment value, rate of return, and duration to figure out the most beneficial investment strategy.
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