Comprehending the SIP Calculator

Comprehending the SIP CalculatorPolicybazaarAverage Rating / 5 ( reviews)
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SIP Calculator

Systematic Investment Plan, also popularly known as SIP is offered by several Mutual fund companies. You can invest even a small amount by using SIP on a weekly, quarterly or monthly basis as per your convenience. It also offers a disciplined approach on how to invest to the investors in Dubai and the rest of the world. This creates a positive approach to invest in wealth creation in the long run.

If you wish to calculate your SIP, you can make use of the SIP calculator available. In simple terms, the SIP Calculator helps the investor to calculate the expected returns and wealth gain.

A SIP can make an investor financially disciplined. It also helps in inducing the habit of saving. One famous rule of investing is, the earlier you invest, the better will be your potential returns, the same is applicable for a SIP.

By using an SIP calculator you can grasp a better knowledge about assets and on how to invest your cash resources in mutual funds. The automation feature involved in a systematic investment plan makes it a wise choice of investment.

Benefits of SIP Calculator

Some of the benefits of using a SIP Calculator are:

Easy and Quick

The calculator helps the investor in speeding up his/her investment plans. Otherwise, it can be confusing and complex if done manually and the scope for error is also high. However, with the use of the SIP calculator, the results that an investor gets are accurate and can be used to make appropriate investment decisions.

Once you put the numbers in the calculator, you will get your results for the returns in a matter of a few seconds. With an easy interface, it does not require you to free up a lot of time from your schedule in order to keep a check on your investments. It makes the monitoring of your investments quick and simple.

Favorable

The SIP calculator is favorable for both kinds of investors, the ones who hold a strong financial background and knowledge, and the ones who do not by making it easy for them. A SIP Calculator can easily be formed using any spreadsheet by any investor. However, there are numerous free resources available online that are a better option to use.

Helps Predict Future Returns

The results obtained by the calculations of an SIP calculator are somewhat accurate. This, in turn, helps both the new and experienced investors to benefit from the investments they make in mutual funds by helping them with the estimation of future returns. All the investor needs to do is fill in a few details such as the amount and time horizon, after which the calculator determines the final amount within a blink of the eye.

Easy Interface

No matter which SIP calculator you choose, almost all of them have an interface that is simple to use and the investor only needs to provide limited details in order to receive results.

Start Early

As we said before, one popular rule of investing is the earlier you start, the better it is for you as an investor. The upper hand of early investment is that you can start investing at the minimum available amount. It is always easy to start your investment journey with a small amount as it also favors your pocket.

Disciplined Approach

A SIP helps to inculcate the habit of saving among the investors who do not have a very strong understanding of the stock market because it involves research, strong financial knowledge, technical analysis, and timing.

How does SIP Calculator Work?

The calculations of returns on SIP use the method of compounding interest. All that needs to be done by investors is to enter the amount they wish to invest periodically, choose the number of years they wish to invest for and the calculator will calculate automatically the amount of return provided to the investor.

Workings of the SIP Calculator

The following questions are asked by the SIP calculator before giving you a tentative answer:

  • The monthly amount you wish to invest
  • The time horizon for your investment.
  • The expected annual returns.

However, the SIP calculator varies from company to company.

Why Should You Use a SIP Calculator?

A SIP Calculator should be used for the following reasons:

  • It allows investors in Dubai and other places to get an estimate regarding the amount that their investment would accumulate at the end of the time horizon for their SIP.
  • If investors have this estimate, it helps to plan their finances and how to invest them better and easier.
  • This estimation of the investment value also allows the investors in Dubai to choose the right mutual fund scheme as per their needs.

Steps to Use a SIP Calculator

Step 1: Input the amount that you are willing to invest in. There is a minimum investment amount depending on the scheme.

Step 2: In this step, you can estimate the rate of return on your invested amount. A probable rate of return can be estimated using the track record of the fund and then entered into the SIP calculator.

Step 3: The last step to be taken is to fill the tenure of your investment, this states the time horizon that you have set for your investment.

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