How To Correctly Use an Online Mutual Fund SIP Calculator

A Systematic investment plan is a preferred investment route to park money into mutual funds to maximize benefits. The investment route not only helps build a healthy and disciplined approach towards savings but also allows to development of a steady outlook towards investment.

This approach allows individuals to mobilize a part of their savings regularly towards investments to build a reliable corpus. The power of compounding further works to accelerate savings and build a corpus to help meet targeted financial goals.

These aspects work best if individuals follow suited strategies to align mutual fund investments through SIP with their financial goals. In this regard, an online mutual fund SIP calculator can help plan suitable investment strategies. The tool will help to compare multiple investment approaches to find out which of the approaches would work the best for the user and allow them to determine which one would help generate the most earnings. 

To understand how the tool would help investors let’s explore more about them and their features. 

What is a Mutual Fund SIP Calculator?

The mutual fund SIP calculator is essentially an online investment calculator that helps users find returns on investment. The tool has been designed to use the information fed into its system like principal amount, rate of interest, investment term, and compounding frequency of the returns to determine returns through the investment route.

The calculator has been fed with a SIP formula that helps compute the returns within a few seconds of providing the key details. 

 The mutual fund SIP calculator has a user-friendly interface whose simple design allows users to navigate the tool with more ease. This also means that individuals do not need to be tech-savvy to use the tool correctly. Additionally, since the tool is already fed with the required formula, users do not need to possess in-depth knowledge about the SIP formula and calculation. 

Formula Used by SIP Calculator 

The investment calculator comes preloaded with the formula mentioned below and uses it to help determine the returns on SIP investment –

FV = P [ (1+i) ^n-1] * (1+i)/iFV

In the SIP formula –

FV denotes the estimated amount or final amount 

P denotes the principal amount or investment amount

i denotes the compounded rate of interest

n denotes the investment tenure (expressed in months) 

r denotes the rate of return

A Brief Example of SIP Calculation

Suppose Rick plans to park his money regularly to build a solid corpus in the next 24 months. To meet this financial goal, Rick decides to put away Rs. 2000 each month into high-yielding mutual funds via the systematic investment plan route, with an expectation to earn 12% on his total investments per annum.

So, using the SIP formula, when we can see –

FV = P [ (1+i)^n-1 ] * (1+i)/iFV

FV = 2000 * [(1+0.01) ^24 – 1] * (1+0.01)/0.01

Here the compounded interest rate will be 0.01 as – (i = r/100/12)  

By the end of the investment tenure, which is 24 months in this case, the mutual fund SIP will generate a sum of Rs. 54,486. Typically, individuals can use this SIP formula to compute the interest on SIP manually. Then again, the manual process involves multiple steps which makes the calculation time-consuming and prone to eros. Such gaps can lead to inaccurate outcomes, hampering the user’s financial strategies and planning as the outcome tends to influence both significantly. 

However, individuals can easily remove this confusion by using an online mutual fund SIP calculator. The tool provides outcomes within seconds of entering key investment details, which helps save time. Plus, being pre-loaded with the SIP formula, the calculator offers accurate results. This allows individuals to make accurate estimates of the mutual fund returns and plan their overall investment with more clarity.

Here’s How To Use An Online SIP Mutual Fund Calculator

By following these basic steps individuals can easily use an online calculator –

Step 1: Search for a reliable financial or investment website online

Step 2: Open the investment plan calculator page

Step 3: Click on the SIP calculator option and open it

Step 4: Enter relevant mutual fund investment details

Step 5: Enter the SIP investment frequency 

Once you enter details in relevant fields the SIP calculator will show the estimated earnings and the maturity sum in a couple of seconds. The great thing about this calculator is that it can be used for free not just once but multiple times back-to-back. This will allow users to readjust their input combinations and compute estimate returns again. Such a feature will help individuals understand which combination could work the best for their needs and how it will support their requirements. However, to make the most of this useful feature, it is advised to first set a clear financial goal and investment strategy to understand whether their investment could help reach it. Additionally, it is important to account for the inflationary rate to estimate if the returns will help meet it down the road. 

Top Features Online Mutual Fund SIP Calculator

Let’s explore what we have understood can be the top features of a SIP calculator –

  • Free access with a user-friendly interface

The user-friendly interface of the online calculator makes planning investments seem like a breeze. By simply entering a few key details about the investment into the calculator’s field, users can check their estimated mutual fund returns and final amount from SIP. The best part is it allows individuals to start completely free and then explore their savings potential through the SIP mutual fund route, and access all details online with ease.

  • Saves time

SIP calculator makes users forget the hassles of manual calculations. This online investment tool removes the tedious steps of estimating mutual fund earnings through the SIP route. This means no more crunching numbers manually – individuals can just enter their key details and avail of instant results within seconds. This feature saves the users’ precious time, allowing them to focus more on what truly matters, i.e., comparing SIP options and making an informed investment decision that aligns with their goals and objectives.

Enhances Financial planning

SIP calculators help to plan finances like a pro and that too for free. Individuals can explore and compare different investment amounts, timelines, investment frequencies, and compounding frequencies to see how different combination impacts their future corpus. This flexibility enables users to find the best combination to meet their financial goals, even after accounting for inflation. 

This way an online mutual fund SIP calculator allows individuals to estimate their returns and plan their investments. Having an idea about how to access and use the tool can help individuals make the most of its features. 

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