How to Use an Online SIP Calculator to Plan Your Investments

 Systematic Investment Plans (SIPs) have become a popular way for retail investors to invest in mutual funds. SIPs allow you to invest a fixed amount regularly into a mutual fund scheme over a period of time. This helps you benefit from rupee cost averaging and compounding. Using a SIP calculator online can help you estimate the future value of your investment and plan your investments accordingly.

To use a SIP calculator, first, enter the monthly SIP investment amount you plan to invest through SIP. Let's take ₹5,000 per month as an example. Next, enter the expected rate of return from the mutual fund scheme. For equity funds, you can assume 10-12% annual returns on average. Let's take 11% expected returns. Now enter the investment tenure - how many years do you plan to continue the SIP? Assume you will invest for 10 years.



The SIP calculator will now estimate the future value of your investment. At ₹5,000 monthly SIP over 10 years and 11% expected returns, the investment value comes to around ₹9 lakh. The calculator also shows how much you would have invested in total over 10 years, which is ₹6 lakh. This gives you an idea of the power of compounding, where ₹6 lakh invested grows to ₹9 lakh over 10 years.

You can now play with the inputs and see how the investment value changes. For example, if you increase the monthly SIP amount to ₹10,000, the future value jumps to ₹18 lakh. If you extend the tenure to 15 years, the value becomes ₹22 lakh.

The online SIP calculator is a useful tool to plan your investments. Here are some tips to use it effectively:

  • Enter a realistic monthly SIP amount that you can commit to without fail over the long term. Don't overestimate your ability to invest.

  • For expected returns, be reasonable. Have higher expectations for equity funds and lower for debt funds.

  • Start with a longer tenure of 10-15 years to take full benefit of compounding.

  • Increase your SIP amount by 10-20% each year to account for salary hikes. The calculator will show a higher future value.

  • Evaluate different monthly SIP amounts and tenure to target a specific investment goal like children's education, retirement etc.

  • Use the calculator outputs as a rough estimate. Actual returns can vary based on future market performance.

  • Don't make very high assumptions on returns or be overambitious on tenure. Stick to a SIP you can continue without fail.

  • Review your investments yearly and increase amounts or tenure if required to meet your financial goals.

An online SIP calculator is a useful starting point to plan your SIPs. Use realistic assumptions and focus on investing for the long term. Review and revise your plan as required. Stay invested to reach your financial goals.


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