5 Benefits of using a SIP Calculator

    Mutual funds have been a boon for those who have invested in these market-linked schemes via Systematic Investment Plan. SIP is a simple and effective way of generating long-term capital appreciation through small fixed investments. What SIP does is that it gives investors the liberty to effectively choose an investment sum that is convenient for them and allows them to invest this sum periodically in a mutual fund scheme of their choice.

    A lot of young investors prefer SIP over lumpsum investment because it allows them to overcome market volatility in the long run. Those who invest in mutual funds via SIP do not have to worry about market performance as mutual funds invest in a diversified basket of securities. This means that even if one of the underlying stocks is underperforming, other underlying securities can reduce the overall investment risk and the scheme can deliver returns for its investors. More and more people are turning to SIP investing over conventional investment options like recurring fixed deposits because they are receiving more returns than they ever did from any other investment avenue.

    To understand how much returns one can earn from their SIP investments, investors can use the SIP calculator. An online SIP calculator is a free tool that allows retail investors to determine the total returns from their SIP investments at the end of their SIP journey. This is a simple and easily accessible tool that any layperson can use by inputting a few details.

    Benefits of SIP calculator

    Here are 5 primary benefits offered by the SIP calculator:

    1. It aims to give accurate results

    SIP calculator doesn’t take the mutual fund scheme’s expense ratio into consideration while showing the total return on investment. However, it aims to give accurate results. This online SIP calculator is based on the following formula:

    M = P × ({[1 + i]n – 1} / i) × (1 + i)


    M is the maturity sum at the end of the investment journey

    P stands for the SIP sum

    n is the number of monthly SIP investments one makes

    i refers to the periodic rate of interest

    Using the above formula, the SIP calculator helps investors determine the total returns which can help them figure out whether their current SIP investments are enough to help them achieve long-term goals.

    1. It is less time consuming

    If you try to manually calculate your SIP returns, it can get a bit tedious and time-consuming. However, if you use the online SIP calculator, not only will it show correct results, but it will do so in just a few seconds. A SIP calculator gives you the following details in a few seconds:

    • Total investment sum
    • returns on investment
    • Investment sum + returns on investment i.e. your total SIP returns

    One single calculation is enough for displaying multiple results and this makes an online SIP calculator a time-saving tool.

    1. Conjecture mutual fund investments

    A SIP calculator can help plan their mutual fund investments in a better way as they are forecast their investments for various tenures in a jiffy. For example, it will only take a few seconds to find out how a monthly SIP of Rs. 5000 can fetch total returns over 10 years with an average return rate of 10%. Now you can modify these numbers by modifying the SIP sum, investment tenures, or return rate to get a different result.

    1. Allows investors to make an informed investment decision

    Investors can compare the results of various mutual fund schemes by changing the interest rate in the SIP calculator. This can help them draw an estimate on the returns a particular scheme might fetch over the investment horizon. Based on these estimated returns, investors will be able to plan their SIP investments in a better way.

    1. Disciplined investing

    Upon finding out the magic of compounding by using the SIP calculator, new investors may immediately begin their SIP investment journey, and estimating future returns may inculcate the discipline of regular investing.