SIP or systematic investment plan can be defined as the method of investing in any of the mutual fund schemes. The people who invest in these SIP plans often invest in any particular scheme at a fixed interval which is defined. These can be on a weekly, monthly or quarterly basis. Usually, these are for a defined time interval which can range from 5, 10 to 15 years at a stretch. The mutual fund calculator can be used to check the different aspects related to SIP investment. You can click here for calculating returns on your investment. The different indicators of a standard SIP calculator include:
- Amount invested monthly
- SIP duration (in months)
- The annual rate of return expected in
This can be better understood with the help of an example. Suppose the amount invested per month is Rs 10,000/-. Let us consider that in this case, the duration of the SIP is 12 months and the annual rate of return expected is 12%. The total amount invested over a period of 12 months would thus be Rs 1, 20,000/- The total return on investment in a period of one year would be Rs 1, 27,665 which would translate into a net profit of Rs 7,665/- in one year.
SIP or Systematic Investment Plan
To understand these dynamics in a better manner, it is vital that SIP or Systematic Investment Plan is deliberated upon. The SIP is therefore like investing a fixed amount of rupees in a mutual fund scheme at a regular period over a fixed duration. Thus the investor ends up purchasing more mutual funds when the investing price is low. SIP, therefore, is an investment method in which regular money is deducted from your bank and invested automatically in the mutual fund market on the terms and conditions that you would have agreed upon at the time of purchasing the scheme.
Lump-Sum Investment Plan
In a lump sum investment plan, a considerable portion of the disposable funds is invested in a mutual fund scheme of the choice of the investor. This can generally be done when the investor receives a corpus from any asset that the investor might have received. Investing through a lump sum investment method, however, has more risks. It is thus recommended that investment should be done through a SIP method.
The calculator, however, works in a similar way for Systematic Investment Plan and Lump Sum investment Plan. It is always the intent of the investor if they wish to choose the SIP or Lump Sum investment option based on the imminent needs of the family and their planning accordingly.
How does Mutual Fund calculator help in planning investments?
The fund calculator will give a precise figure of the gains that could be made through fund investment. This will benefit the investor as they can plan for keeping a fixed amount of money aside to be invested in the fund. Moreover, as the calculator can also show the expected gains, the investor can do some forward planning too as they would be in a position to know the exact gains that would be made through the mutual fund investments.
The amount that a person earns from the mutual fund can thus be planned to be invested in advance and its appropriate usage can be decided even before the actual investment has begun. Calculating the gains prior to investing in the mutual fund will also make the investor confident about the market and they would develop a better comprehensive understanding of the current market scenario.
How does a Mutual Fund Calculator work?
It is a common fact that mutual fund is a relatively safe way of investing but you should ideally be aware of the fact if your mutual fund scheme is generating the returns in the way you might have expected it to perform. You could also end up wondering if the amount of SIP you are investing would give you the kind of returns that you must have expected in the long run. All these answers lie in the way a mutual fund calculator works. The details of the process have been explained above and you should know by now that the use of this calculator will provide you with the investment value at the maturity by calculating the return on the funds as per your investment horizon. The different variables of the calculator like SIP or lump sum, the amount of investment, the frequency of the Systematic Investment Plan, expected returns and duration can be altered. It is therefore recommended that you should do all your preliminary exercise prior to the time when you invest in the market.
Check out the gains that you can make from the mutual fund market through the fund calculator and invest confidently. The gains are all yours!