Find out how to calculate SIP manually or with the help of SIP calculators.
If you wish to invest in Mutual Funds but do not have a lump sum amount to spare, you can invest via SIP. An abbreviation for Systematic Investment Plan, SIP allows you to invest in Mutual Funds in instalments. You can compute the returns from your SIP investment before you begin the SIP with the help of SIP calculators. Let us find how to calculate SIP returns using SIP Calculators.
A SIP Calculator is an online simulation tool that enables you to compute the potential returns on your SIP Mutual Fund investment. This tool uses variables like your preferred investment amount and investment tenure, which can be weekly, fortnightly, monthly, or quarterly along with the expected returns rate to compute the SIP returns.
Here are the steps on how to calculate SIP returns with the help of an online SIP calculator:
Once you enter these details, the SIP calculator will instantly compute the expected returns rate.
If you wish to corroborate the accuracy of the SIP calculator, you can also calculate the potential returns manually. Use the below formula to compute the returns from your SIP investment manually.
FV = P [ (1+i) ^ n-1] * (1+i)/i
Now let us say that you choose to invest INR 2,000 (P) every month for 24 months (n) at an expected Returns Rate (r) of 12%, on which you stand to earn compounded returns (i) of 0.01%.
At INR 2000 per instalment over 24 instalments, your total investment amount is INR 48,000. At a 12% returns rate, your final calculation will look something like this:
FV = 2000*[(1+0.01) ^ 24-1] * (1+0.01)/0.01.
At this rate, you will earn INR 54,486 when the SIP matures after2 years of investment.
Knowing how is SIP calculated and how to calculate SIP returns online or manually helps you make informed investment decisions. Since the investment market is volatile, the SIP calculator cannot compute the exact returns rate. Moreover, the calculator does not account for expense ratios and exit loads it gives you a rough estimate of the total value of your SIP investment.
Download the digibank by DBS app to get started with your SIP. Also, you can open bank account online with us.
*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.