When it comes to an investment in mutual funds, you will find yourself with two options or modes of investments as they are referred to. The two modes of investment are lump-sum investments and systematic investment plans (SIPs). Under Lump-sum investments, you are required to make a one-time payment for the purpose of investing in the mutual fund scheme you signed up for. So, before choosing the lump-sum mode of investment, you need to ensure that you have the required amount of investment at your disposal. Conversely, systematic investment plans are known for functioning differently than lump-sum investments.
A systematic investment plan can be defined as a mode of investment in which you can choose to make payments for mutual fund investments at regular intervals. Considered the preferred mode of investment, SIPs are very affordable and won’t burn a hole in the wallet. To make SIP payments, you leave a standing instruction with the bank.
But before signing up for this mode of investment, you need to determine how much you should keep aside every month for the purpose of investment. It can be done with the help of a SIP calculator. SIP calculators are a type of calculator in which you can learn both, how much to keep aside every month and how much wealth you would probably end up accumulating by allocating a certain sum for a particular period of time.
How do SIP calculators work?
The SIP or the systematic investment plan calculator can be defined as numerical analysis of your SIP. Usually, the SIP is used by investors to meet their long-term financial goals. So, they use the SIP calculator as an important tool. The SIP calculator can be used as a tool that helps you in determining the returns you can earn when you are parking funds in a mutual fund scheme. Also, systematic investment plans can be monthly, weekly, or quarterly. However, monthly SIPs are the most common example of SIPs.
These calculators are tools that are known for enabling an investor to get an estimate of the returns that they could probably enjoy against their mutual fund investments made through the SIP route. A SIP calculator can give investors an estimate at two levels. Firstly, it can provide insight into how much your investments will grow over time. On the other hand, the calculator also tells you how much you need to invest to reach your financial goal. However, simultaneously, the actual returns offered by a mutual fund scheme depend on various factors such as market conditions. Therefore, you must keep in mind that these are just estimates. Here are some of the common benefits that are associated with SIP calculators:
What are the advantages associated with SIP calculators?
Here are some of the reasons you should consider using SIP calculators:
- It is easy to use these calculators:
One of the major advantages of a SIP calculator is that it is very easy to use. Using the calculator can quickly derive the estimated returns that one could accumulate against small monthly investments. Hence, with the help of the calculator, you can strategically plan out your investments to meet your financial goals in the long term.
- These calculators will provide you with insights into how much you need to save:
While a lot of people will provide insight into how much you might end up accumulating by investing a certain sum, these calculators also make it easier to learn the amount you need to save to reach your financial goals.
- These calculators are free to use:
It is very easy to find SIP calculators. All you need to do is a simple search for it on a search engine website. Moreover, you are not required to pay anything for using the calculator.
The online SIP calculator is a tool that can help you in determining the estimated returns. Apart from that, the calculator can also tell you the required amount of investment for SIP.
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