With the ever-increasing lifestyle choices and liabilities, it has become equally
important to plan your financial future wisely. The key to financial planning is to determine one’s financial goals and create a roadmap to achieve them. One such instrument in financial planning, the Systematic Investment Plan (SIP), has been gaining popularity with most age groups. With a SIP, one can start investing minimum amounts regularly in a selected mutual fund scheme. But how do you know the future value of your investments? This is where the mutual fund SIP calculator plays a vital role.
The mutual fund SIP calculator is a tool that gives you an estimate of the returns earned on your investments made through SIP in a specific mutual fund scheme. As an investor, it is very useful in calculating the returns on your SIP investments to plan your financial goals effectively.
The use of the mutual fund SIP calculator is not just limited to estimating the returns. It can also be used to calculate the monthly SIP required to achieve a particular financial goal and gives a realistic view of how much you need to invest regularly to achieve your financial goal.
The Step Up SIP Calculator is another tool that takes into account the investor’s increasing capacity to invest over the period. By using a step up SIP calculator, an investor can continue with their SIP investment in line with their increasing annual income. As the income increases annually, with Step Up SIP, the investment also increases.
Here’s a step-by-step guide on how to plan your financial future using a mutual fund SIP calculator.
- Determine your financial objective: Be it your child’s education, marriage, retirement fund, or buying a house, have a clear and specific financial goal..
- Time period of Investment: Define the time frame for your investment. Mutual fund investments are usually long-term investments, hence, plan to invest for at least 5 years or more.
- Expected Rate of Return: The return on mutual fund investments vary according to the market conditions, and that’s why it is generally considered to provide a return of 12%-15% annually.
- Monthly Investment: Begin with the amount you comfortably invest each month. You can input this amount in the monthly investment field of the mutual fund SIP calculator.
The calculator will then provide an estimated future value of your SIP investments. Planning for a step up SIP investment is similar, except you also need to input your expected annual increase in SIP investment.
The mutual fund SIP calculator and step up SIP calculator are effective tools that can provide an investor with insights about their investments. It doesn’t guarantee the returns but gives an approximate idea based on the inputs. These can shape your investment strategy and contribute significantly towards planning your financial future.
Investing in mutual funds through SIP can be a good way to meet your long-term financial goals due to the power of compounding. However, investing in mutual funds carries risks. They are subject to market conditions, and the worthiness of the funds solely depends on the fund managers and the market environment.
Before investing through SIP, it’s recommended to thoroughly understand the market conditions and risks involved. Use the mutual fund SIP calculator and step up SIP calculator as planning tools, but do not rely totally on them.
Disclaimer: This article is for informational purposes only and is not intended as financial advice. Investing in the Indian financial market carries risks, and investors are advised to conduct their research or consult with an experienced professional before making any investment decisions.
