Know the right SIP amount calculation by using the SIP calculator

Published July 28, 2023

Financial independence, stability and sustainability is the need of the hour and we all, as responsible individuals, need to take small steps towards it. To achieve the big goal of building the desired corpus or achieving a long term financial goal, we need to complete small goals and milestones. The first question you should be asking yourself is, ‘Is your salary day your SIP Day?

This simply means, do you invest in a SIP the day you get your salary, or you avoid it and push it to the next month? If the answer is the former, you have taken the first baby step towards reaching your financial goal. But, if the answer is the latter, then you should consider changing your course and start investing in a SIP investment plan. As salaried individuals, it is essential that we include SIP in mutual funds in our list of expenses. Just like your groceries, EMIs, electricity bill, add SIP as an additional expense too, as it is the road to a brighter and stable future. For non-salaried people, they can invest their savings, or a part of their allowance. Whatever be the amount, a beginning in the investment world is imperative and for that, SIP is the best and most convenient option.

What is the right SIP amount?

To decide the right amount for your SIP investment plan, you need to be aware of the following-

  • Financial goal amount at current cost.
  • After how many years do you want to achieve your goal?
  • Average inflation rate.
  • Future goal amount after accounting the inflation.
  • Return expectation on mutual fund investments.
  • Know the SIP amount to reach the inflation adjusted goal amount.

It is suggested that you start a SIP investment plan only after knowing the ‘Right SIP Amount’ and stay invested during the investment period, irrespective of the market fluctuations. As a result of this, you end up getting more units when the market is low and fewer units when the market is high. This helps in accumulating units at lower average cost per unit over time, known as rupee cost averaging. After knowing the ideal or right SIP amount, you would also want to calculate SIP returns. To help in that case, a SIP return calculator is available online. It is an easy to use tool that helps one generate the results of their investment in seconds, so that they get an estimate of what corpus can be expected after the given tenure.

Let us understand better with an example:

If Ms. Preksha invests an amount of Rs. 20,000 monthly in a mutual fund through SIP, over a period of 10 years, she can accumulate a corpus valued more than Rs. 46 Lakhs, assuming the rate of return to be 12%. In this case, the invested amount by her over 10 years is Rs. 24 Lakhs. Thus, SIP calculator helped her estimate the future amount and calculate SIP returns, in an efficient manner. This tool is so simple that it can be used by a layman, one does not need a financial expert to operate this.

A SIP investment plan is an effective way of converting your savings to investments, that can earn magical returns over time. To facilitate this, a SIP calculator can be used to know the future corpus based on the right monthly investment through mutual fund SIP and expected returns.

CDN Newswire