SIP Calculator

When I was young, I thought money could buy everything I could think of, and now that I have grown up as a mature man, I know that it really can. But there is something more precious than money, and we call it more money. If you’re also on the way to multiply your money on the basis of systematic monthly investments, or what we call SIP, we know something that can help you vastly.

SIP Calculator will assist you in making most of your goals realistic while choosing the best investment plan as an absolute fit. Briefly, it’s important to find at least blurry future forecasts, and we can do that with an instant economic calculator by feeding just the three important components.

This article will guide you properly with the acknowledgement of SIP Calculator, its usage, and all its applications. Hope you’ll find the answers to what you were looking for after using this mere calculator framework.

What is a SIP Calculator?

The research starts with defining the SIP Calculator, and it’s so important to first know about the tool that you’re going to use in future. This will make the usage handier and it’s literally so adventurous that you would love using it.

Basically, SIP Calculator is a simple economic calculator that works without you calculating each thing and putting them on a formulae that looks like below –

M = P * [{(1 + i)^n – 1}/i] * (1+i), where

P is your systematic monthly investments,

n is the number of years you’re investing for,

i is the rate of interest as acknowledged by company’s CAGR.

Sounds so complex, right? Don’t get too tense about this formulae, as the SIP Calculator is going to take these three P, n, and i from you to give you the precise details about the rewards you can make. Its purpose is to simplify the calculations, and make it more instant then deploying the whole above plan.

If you’re on your way to plan financially and get most of your goals reached ASAP, you must need this calculator functionality in your arsenal. Also, if you don’t want to make the monthly investments, you can merely choose the Lumpsum Calculator for making a Lumpsum SIP calculation.

Does a SIP Calculator Work?

If we go technically, SIP Calculator uses three important components, Investment Amount, Investment Duration, and Expected Returns. There is one more option you’ll see on the calculator and that’d be for switching monthly to Lumpsum plan.

All the components have their own effect on the results of SIP Calculation as follows –

Investment Amount – Investment amount works parallel to SIP Calculation; the more amount you’re going to feed in your monthly SIP, the wider the results. As we know, money makes more money.

Time Duration – The time duration throws a compounding effect on the investments and that’s why Americans say that there is no better time to start investing. Sooner you start, the better it will be.

Expected Returns – Every bank, financial institution, or mutual fund firstly shows us an expected return. These returns can vary a lot, but the calculator works with the data you feed, and it also affects a lot.

The way you invest money sounds like how you’re going to make more and the above three components help the calculator in assessing what you can get with your plan.

Benefits of Using a SIP Calculator 

SIP Calculator works just like your phone’s calculator app, taking the numeric details from you and giving you the results that you want. That’s what we think is the first benefit allowing you to calculate upcoming results more conveniently. But there are more privileges as follows –

No more being plugged in with a harder calculation formula as this calculator can provide you with accurate and personalized investment projections without struggle.

• You can use the calculator for comparing your favorite investment plans as having them differentiated on the basis of your goals is what gives you a plus point.
• Every investor is trying to make money to employ it in the end. You must have a goal and a risk appetite. This calculator app would help you being linked to both of them, Goal, and Risk.
• Customize the number of years respected with the estimated returns to find out the required enhancement in monthly investments for reaching the goal even faster.

Step-by-Step Guide to Using a SIP Calculator 

We know your next step and it’s about going to the topmost section of this article and start having multiple trials on the SIP Calculator. Although, it’s always there for you and not moving anywhere. You can also give a minute in reading these below step by step guide for using a SIP Calculator as that’d give you a proper approach to have the components ready and fitted in –

Step 1: Enter the investment amount that you’re going to invest every month as an SIP. If you’re going with the Lumpsum Investment, please check out this Lumpsum Calculator.

Step 2: Now, Get to the Investment Duration point and fill it with the number of years you’re going to invest for. (You can also choose Lumpsum if you want to invest a bigger amount at one time.)

Step 3: Type the rate of interest (in percentage) based on what you saw on the website of a financial institution or your own research.

Step 4: Now, you have the option to select your preferred currency.

Step 5: Click the Calculate button and the response would be assessed instantly. You can also later analyze the results to make newer adjustments and have better stats.

Tips for Maximizing SIP Investments 

There are a few tips we think are useful enough to help you intensify the SIP investments. See, there are two pillars of filling a newer SIP investment, which are the amount you’re going to invest every month, and the duration till what you’re going to invest. So there are a few tips that we’re listing below to keep your profits maximized with the investments.

• You need to be consistent as the effects won’t reflect for months till the compounding kicks in, and you start getting interest in interest.
• Only invest the amount apart from your emergency liquid funds, as withdrawing should be prohibited for maximizing SIP returns.
• Each of us is investing our money with the based risk capital for reaching near the goals. So you need to adjust the investment amount based on those goals.
• Asset Allocation is most important when investing money online. You should diversify the investment portfolio for better risk management. We also have created this Asset Allocation Calculator for better assistance.

Common Mistakes to Avoid with SIP Calculator 

We should make mistakes, but only to keep a track on them and avoid them in the future. The same reason kept us writing about the common mistakes that people mostly make while using the SIP Calculator. Every tool have its own limitations, and it’s important to remember them –

First, don’t ever rely solely on the past performance of a company, stock, bank, or financial institutions. Numbers can lie.

• SIP Calculator shows you the nominal or formal returns you’ll get over time. It never includes the inflation reports or taxation modules. It’d be better if you’ll calculate by subtracting them on your own as an additional step.
• Sometimes, the future forecast is right in front of our eyes but we evade taking action. It’s better to overlook your investment timely to review and rebalance them.
• Going with a Lumpsum investment sometimes sounds hazy as the price for which you’re locking in, can either be so good, or bad on the basis of your chosen plan. However, it also has its own privileges too.

Real-Life Examples of Using SIP Calculators 

These days, studying with examples makes keeping a track on things more effective as our mind works on the basis of stories. That thing drove us to creating two case studies listed below on the basis of two different goals to achieve with the SIP –

Case study 1: Planning for retirement

Peter in his 30s planned for the retirement corpus as much required to maintain the exact lifestyle he had at that time. After calculating everything from the age of 50 to 80, it summed up approximately $500,000. The same moment he opened the SIP Calculator, and started customizing the components for getting the required estimated returns over time.

It helped him a lot, as he got a perfect SIP plan of saving somewhat $500 every single month from his salary at a 12% rate of interest annually.

Case study 2: Saving for a child’s education

SIPs can effectively help in the child’s education, and help you get no need for student loans. It’s so simple, as you’re going to need somewhat $150,000 for your child’s schooling and college education. That money sounds a lot at first, but once you’re investing on an SIP basis, you can have mere investments of $300 every month at the 12% rate of interest for 15 years.

After this, you’re free for letting your child get educated even from a better private college. You also need to keep a track of varying inflation reports to be consistent with saving funds.

Summary and Key Takeaways 

When you trade your money in stocks or forex, the best traders tell us to either rely on the number of winning trades or the Risk-Reward ratio. Here, the thing works similarly but with different parameters, as if your investment amount is lower, you should invest for a longer term, and vice versa. In all ways, the SIP Calculator would help you with just three components.

As per the future speculation by the best investors in this whole world, it became the most important thing to save a part of your earnings. No matter if you have fixed a goal yet or not, you still should start investing your money as the way inflation goes rising, salaries won’t help us living the same lifestyle in future.

Frequently Asked Questions (FAQs)

Conclusion 

Insanity is when we grow our money without having a perfect report of future forecasting stats or the proper calculation. Mostly, we invest our money for conquering particular goals, like being retired early, buying a new car, or maybe a piece of land. But we don’t choose the investment plans properly to fit our goals.

That’s where the SIP Calculator kicks in the game making your plans more realistic. It’s a beneficial tool for all the investors as it works for the calculation of compounded Equity earnings, Mutual Funds, and Pension calculation too. Using it is simple and you will also love diversifying your choices to have different and more reliable results in the end.

Don’t invest hurriedly; take time, strategize well, use SIP Calculator, and fill in the money!

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