March 2, 2024
What are SIPs & how to easily calculate your returns on them

Systematic Investment Plan (SIP) is considered as one of the best investment options in mutual funds. If you are looking for a long-term wealth creation strategy, then SIP could be opted to achieve your financial objective.

In case of SIPs, people can invest a fixed amount periodically. The frequency of the investing options can be chosen as per your convenience. It can be yearly, quarterly or monthly.

The main difference between investing in a bank recurring deposit and SIP mutual funds is that the mutual funds tend to deliver better returns, but at the same time, your money is exposed to market risks.

In case you are curious about how much return your SIP investment can generate for you, read on and you will get to know how a SIP return calculator can help you to calculate same easily. You can click here to know more about the SIP return calculator.

How to calculate the returns by the help of SIP calculator

SIP investment calculator helps in calculating the returns easily. The SIP return calculator works by the data entered by the users. SIP return calculators are also available online.  The investors have to enter their amount of investment, duration of investment and their expected rate of return. The SIP calculator strictly follows the formula of compound interests. The steps to use a SIP calculator are as below:

  • At first, the investors have to input the monthly SIP that they want to invest. For mutual fund investment schemes, a minimum amount of Rs 500 can be deposited per month. In the case of other investment policies at least Rs.1000 per month must be deposited.
  • The second step includes the estimation of the possible rate of return on the investment. This is calculated on the basis of the fund’s track record.
  • In case of a SIP calculator, the last step depends on the tenure of the investment. It is very essential for the investors to decide the time duration they want to invest. If you want to gain more returns on one particular investment, then you have to keep it invested for a longer-term. But usually, 1 year is the minimum time duration to stay invested in the SIP.

People can plan their finances better when an estimate comes handy. The sip return calculator follows the simulation process to figure out the same in an easy way.

How to calculate the returns manually

Calculating SIP manually is a little complex but can be done if you know the correct way. The basic knowledge of working with Excel is essential in order to determine the returns. The formulas for calculating the SIP should be kept in hand while calculating the returns according to the investments.

Even if calculating the returns on excel is easy and feasible, yet it wouldn’t be error-free. If you want to find out the final or the maturity value of the systematic investment plan, it is always advisable to use a SIP return calculator.

Using the calculator can help to a great extent to determine the expected rate of return on SIP. The calculator asks for some details and after entering them it will immediately display the best options on SIP. The investors are suggested to compare all the available options on the SIP return calculator. Apart from lucrative interest rates, the investors should check out the past performance of the SIP in which they have been planning to invest. The past three years record would be sufficient to help zero on SIP.

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