Mistakes to avoid while using a SIP calculator

SIP calculator

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A systemic investment plan is an investment made periodically. SIP allows you to invest in mutual funds regularly to earn good returns in the long run. You can start a SIP as low as Rs.2000 monthly, quarterly, or annually and there is no cap on how much you can invest.

What are the benefits of SIP?

Many investors prefer SIPs due to their various advantages:

  1. Gradual Investment – SIP installments are small and easy on the pocket. So, it doesn’t leave any financial burden on those who like to invest.
  2. Flexibility – SIP allows an investor to increase or decrease the periodic installment according to his financial conditions, which makes it one of the most preferred choices of investors.
  3. The benefit of compounding – SIP allows you to enjoy the benefit of the power of compounding. It enables you to enjoy the returns not alone on the principal but also the returns earned.
  4. Less risky – Though SIPs are linked to equities, they are less risky. As SIPs are for the long term, they offer lower risk. You can stop SIP anytime to prevent further losses when the market is not doing well.

What is a SIP calculator?

A SIP calculator is an online tool that allows you to find out your approximate earnings through investment at the end of the tenure. You can add the amount that you are investing and the frequency of your investment, and the calculator will provide you with the results accordingly. SIP calculator lets you calculate the amount you should invest periodically to achieve your financial goals.

How to use the SIP calculator?

You can use any SIP calculatoronline and follow the steps mentioned below:

  1. Fill in the duration of the SIP, which is the time period for which you want to invest in a mutual fund. The SIP duration can be from a few months to a few years.
  2. By checking the performance record of the mutual fund, you can find out the rate of return on the investment.
  3. Fill in the monthly SIP amount that you want to invest in Mutual funds of your choice. You can enter the target amount to identify the amount that you will have once the tenure ends. If you know for how long you want to invest your money in the mutual funds and know your target, then the monthly SIP calculator will tell you the amount of the monthly SIPs that you need to make.

Mutual fund calculators are easy to use; the only thing that you need to keep in mind while using them is to fill out the information accurately. If you give the wrong data to the calculator, you will get inaccurate results. SIP calculators help you easily calculate your SIP returns, along with telling you how much money you need to invest periodically to reach your targeted corpus after a particular time frame.

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