What is SIP Calculator?
How to calculate SIP returns? The answer is an online SIP (Systematic Investment Plan) calculator. SIP Calculator is an online tool that helps you calculate the return on your SIP investments. The calculation is based on the following inputs
SIP amount: The amount that you invest in each time period. It can be as low as Rs 100 or can go upto Rs 10 lakhs.
SIP frequency: The time gap between 2 successive investments. It can be monthly, quarterly or half yearly.
Expected return per year: The return that you expect to get from your investments. On the conservative side, the long term average return from equity in India is 10%.
Investment duration: The time period over which you invest. It is prudent to stay invested for a longer duration say, 5 years or more in order to achieve reasonable returns.
On the basis of the above inputs, the SIP calculator gives you the result in a matter of secondsLucknow Investment. Calculating the return on SIP investments is a tedious process as you are investing a sum of money at regular intervals over a stipulated time period. The process is simplified by the online SIP calculator.
How does SIP Calculator work?
SIP Calculator uses the following formula
P [(1+i) ^n-1] x (1+i)/i
• P: SIP amount
• i : Expected rate of return per frequency period that is, monthly/quarterly/half-yearly
• n: Number of installments that is, Investment duration x frequency that is, monthly/quarterly/half-yearly
An example of how SIP calculator works
Assume that you wish to invest Rs 10,000 every month for 10 years. You expect a return of 12% per year from equity investment. In this case, the total corpus that you will accumulate after 10 years is Rs 23.23 lakhs. If, however, you increase investment to Rs 15000 every month, you will accumulate Rs 34.85 lakhs. You may tweak the input data in order to see your desired corpus.
What is SIP?
Systematic Investment Plan or its acronym SIP is an option designed by mutual funds, allowing you to invest a small sum in the stock market on a regular basis. The main advantage of an SIP is rupee cost averaging. SIP enables you to purchase more units when the market is low and fewer units when the market is high. This helps in lowering the average cost per unit. Besides, SIP helps in magnifying the return on your investment through the power of compounding. The trick is to start early.
What are the advantages of investing through SIP?
The advantages of investing through SIP are as followsKolkata Investment
I. Rupee cost averaging: Investing through SIP helps in rupee cost averaging. By buying more units when the market is low and fewer units when the market is high, SIP helps in reducing the average cost per unit.
II. Power of compounding: Compounding allows your investment to grow exponentially. Compound return is the return on return gained over a period of time. It is an effective way to increase your wealth multifold. In order to reap the benefits of compounding fully, the trick is to start investing early.
III. Instills discipline: SIP makes you disciplined. By investing diligently over a long period, one builds a large corpus at the end of the investing period.
IV. Mitigate risk of bad market timing: By committing to regular investment through SIP, one can reduce the risk of bad timing in entering or exiting the market.
V. Riding through volatility: Equity markets are inherently volatile. They move up and down due to a combination of factors like government policies, corporate profits, global markets, interest rates etc. SIP helps you overcome market volatility. In SIP, you get more units when the market is low and fewer units when the market is high. This helps in optimizing the return on your investments while mitigating the downside risk.
What are the types of SIP?
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