Looking at the Indian stock market, be it the NSE, BSE or any other OTC exchanges, mutual funds are on the rise. Contrary to institutional investors and seasoned traders, small investors and the general public are investing in the financial markets. And the ease and flexibility of investing in mutual funds have a significant influence in attracting this interest. General investment patterns and trader behaviour indicate the SIP (Systematic Investment Plan) is a popular choice. A SIP return calculator is a great tool to plan and help investors plan their investments to maximise their returns. But the question is how useful and why is the SIP return calculator worth it for you.
1. Making informed decisions
Financial markets are extremely volatile and are risky investments, whether you are a seasoned trader or a new investor. Therefore, making informed investment decisions and planning your trades is important and responsible. However, with SIPs, when you are investing on a certain frequency and in specific amounts and time horizons, estimating the future value is tedious. An SIP calculator makes this a lot easier and you can assess and forecast your returns to choose between different funds.
2. Simplifies your financial planning
- The market has a variety of different investment products like mutual funds, options, equity, bonds etc. Each of these has different returns and scales to forecast the outcome. While all of this gives you the flexibility to choose your investment strategy, it also makes it cumbersome to pick the right assets. With a SIP calculator, you can compare the returns for funds and assess them for different investment amounts and time horizons. This simplifies your financial planning workload as you can set realistic goals and project your returns over time.
2. Risk assessment is critical
Be it any investment asset, equity, mutual funds or OTC products, they all have different risk profiles. Some may be riskier in the short term, while others can be a risky bet in the long run. Depending on your risk appetite and trading strategy, as an investor you need to know your risk. Tools like the SIP calculator help you compare the potential returns and compare your investment choices. Therefore, enabling you to align your strategies as per your investment objectives and risk tolerances.
3. Tax planning and budgeting
As an investor in India, you can claim different tax benefits and as liable for tax payments for your returns. At the same time, when you are planning your financial goals, it is tricky to plan for future asset allocation. With an SIP calculator and investment goals in mind, you can create a budget right away. It can help you plan your financial needs and the amount you need to fulfil your objectives. Therefore, enabling you to plan your tax as well as budget your income to meet these goals. Overall, it helps you to set realistic expectations and financial milestones for your long-term goals.
Currently, there are hundreds of active mutual funds listed on the stock exchange. You can choose to have a SIP mutual fund or invest one-time and wait till you wish to withdraw. Different investors have different trading strategies and objectives, and trading tools like SIP calculators, risk analysis charts etc. are a great help.