SIP (Systematic Investment Plan) is a type of financial plan wherein a small portion of the money in invested across the financial market with some lucrative mutual fund schemes. This investment is to be done on a regular, monthly or quarterly basis for a fixed period of time. The overall concept of SIPs is similar to that of the recurring deposits (RD) made in banks. The only difference is that in SIPs, there is no burden of investing the money as a lump sum. The investors can keep investing a certain portion of their income set aside. This would eventually generate wealth for them in the long run.
As the investment of a small amount of money is done on a periodic basis in SIP, it also tends to reduce the overall impact of market volatility. An effective tool with respect to the SIPs is the SIP calculator. The SIP calculator helps the individuals in calculating the expected wealth gain and anticipated returns over the monthly SIP investment of money. With the help of this calculator, the investors can get a rough idea about the maturity amount for any given monthly SIP in which they are investing. This would be based on the projected overall annual return rate.
How does an SIP Calculator Work?
The working of the SIP is similar to the mutual fund schemes. When you have invested a certain portion of money in any lucrative and reliable SIP scheme, then you would want to know about the expected returns from the same. The fundamental of working of the SIP calculator is based on two underlying methods of the working of the SIP scheme.
- Effect of Compounding: In contrast to simple interest, the process of compounding of the interest involves the process of ensuring the interest earned as a portion of the base capital of the investor. Then, the subsequent interest is calculated on the basis of the newly increased capital. Therefore, compounding of the interest accelerates an exponential rise of the money of the investors. The effect of compounding tends to increase as the tenure of the investment increases. This concept is used in the SIP calculator as well for determining the returns by the end of the investment tenure.
- Rupee Cost Averaging: This is the approach used with respect to SIP in which the investors are required to make the investment of a fixed amount of money at certain intervals. This ensures that the investor is buying more shares of the investment when the prices tend to be low and less when the prices are high. With the help of this principle, the SIP calculator is able to anticipate the returns an investor would get after the end of the investment period.
If you are confused about which SIP calculator you should be using to calculate your expected returns, then Upwardly offers the most reliable and effective SIP calculator for you. This SIP calculator is highly simple to use and generates the closest figure of the approximate returns after a certain period. The investors just have to choose the desired mutual fund scheme and then the monthly investment. The SIP calculator by Upwardly gives the instant results with respect to the expected returns upon the given inputs.
With the help of an effective and reliable SIP calculator like from Upwardly, the investors are able to determine the exact amount of money they need to deposit every month or quarterly to generate the desired returns. As a result, the SIP calculator infuses a notion of savings in the investors as they would be keeping aside a certain portion of the money for making the investment.
Calculate your returns with Upwardly SIP calculator now!