Finance

Easy Steps To Calculate Your SIP Amount

SIP (Systematic investment plan) investment is the ideal way to start your investment in the stock market. It allows you to invest systematically in pocket-friendly amounts on a monthly or quarterly basis to achieve your investment goals. The SIP amount gets deducted on a predetermined date which is chosen by you. SIP investment inculcates disciplined investing within you and the best part is it helps you to protect your investment against market volatility. In this article, we are going to learn about SIP investment and the easy steps to SIP calculator amount.

What is a SIP calculator?

The SIP calculator helps you to calculate the estimated returns on your investment in a mutual fund made through SIP. However, the actual returns might be different from the estimated returns. So, you should not rely solely on the SIP calculator to make your investment decisions. To calculate SIP returns, you have to enter the SIP amount, expected return, and time period.

The best part of SIP investment is that you can start with as little as INR 500 per month and have no upper limit. Most people start investing to fulfill their financial goals or to grow their wealth. Hence, you should consider your financial goals, the goals can be creating a retirement fund or buying a house and analyzing your risk appetite by understanding your risk profile. For example, if you are a conservative investor, you will not take a higher risk to earn a certain rate of return whereas if you are an aggressive investor you can take a high risk to earn returns from your investments.

Easy steps to calculate your SIP amount

#1. Choose a mutual fund for your SIP investment

The first step is to choose the mutual fund you are interested in investing in via SIP. There are different mutual fund schemes in the market that suit different investors. So, before choosing any mutual fund scheme make sure to analyze your risk profile and parameters of the mutual fund scheme such as fund manager, average return, expense ratio, and fund history.

#2. Open an online SIP calculator

When you open the online SIP calculator, you have to enter the monthly investment amount you are willing to make every month. This is the amount that will be deducted from your bank account at a predetermined date every month. The SIP amount and the date will be chosen by you.

#3. Enter the estimated return and the tenure of your investment

After deciding the monthly investment amount, you will have to enter the expected return per annum. Make sure to enter the expected return based on the chosen mutual fund average return to help you find out the estimated return on mutual fund investment, then enter the time period of your investment. The estimated returns are determined by the SIP amount and the time period of your investment. It is advisable to invest for the long term to reap the best returns. The longer the tenure of your SIP investment, the more returns you will receive.

The SIP calculator helps you to analyze the estimated returns on your total investment amount. It will show the total investment value along with the estimated returns and total value after the tenure of the SIP.

To conclude, SIP investment is the most preferable way to start investing in the stock market. You can earn lucrative returns if you invest for the long term. However, investing in the stock market is associated with high risk. So, it is advisable to assess your risk tolerance, investment horizon, and investment goals before investing in any instrument. Using a SIP calculator will ease your investment planning and it is easily available online.

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