How to Calculate Returns Using SIP Calculator?

Created By MySIPOnline
On Jan 14, 2019
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How to Calculate Returns Using SIP Calculator?

This article explains the process of planning investment in mutual fund through SIP calculator.

Investing through SIP is the best approach to get promising returns by investing in equity instruments without facing the market volatility tides. Mutual fund calculator is a tool to calculate the returns you will get by investing in a systematic manner at a regular interval over a long-term horizon for risk-adjusted returns. As calculating the expected return manually involves complex calculations, most of the investors take help of financial analysts to do this task. But, you need to understand that it is a simple process to calculate the returns so easily with precision using the online calculator tool. Here is how you can calculate returns with SIP calculator. 

Decide the Monthly SIP Amount 
SIP is the mode of investment to invest in mutual fund and you can start investing in a systematic manner to get adequate returns over a tenure. When you plan for investment through SIP, the main concern is how much to invest in a mutual fund to get adequate returns. It is not an easy task for the investors from non-financial backgrounds to decide the SIP amount. So, whether you are new or old investors, you can make a decision based on how much you can invest in the scheme depending on your monthly salary. 

When you will decide the monthly amount based on your salary it becomes easy to save a large corpus at your financial convenience.

Evaluate the Rate of Returns

The rate of returns will measure how exponentially you want your money to grow annually. For your convenience, you can write a series of the rate of returns such as 10%, 15%, and 20% based on your risk appetite. Here, I want to clear one thing to you that the higher the return, the higher is the risk measure. So, you also need to analyse your risk-appetite as well before evaluating the rate of returns. If you are an aggressive investor, you can target for 16% to 20% rate of returns. For moderate risk, you need to focus on 10% to 15% annualised rate of returns. Further for risk-averse investors, targeting for 8% to 10% will be an adequate option. 

Include Tenure of Investment
To accomplish any financial goal, you have a certain time limit to collect sufficient money before the time. For instance, if you are planning to collect adequate funds for your child’s professional degree and your child is of 10-years old now, you have a time horizon of approximately 12 to 15-years. So, you can target for 12-years to get adequate returns. Further, you can simultaneously transfer the excess returns in debt or liquid funds as well to make them comparatively secure to sustain the market volatility and get expected returns after completing the tenure. 

Estimate the Expected Returns
Although SIP calculator will give you the expected returns you will get after feeding the information, but knowing the targeted amount will assist you to accumulate a sufficient amount in a planned manner. 

If you do not plan smartly now, you will end up with less amount for your financial goal. So, plan accordingly to estimate the expected amount with precision.

Feed Information in SIP Calculator
At this stage, you are done with pre-planning and now its time to implement. In the SIP calculator tool, feed information regarding SIP amount, the rate of returns and time horizon, and click on the calculate button. That’s it. You will get the total invested amount and total returns. 

Alter the Data to Get Adequate Returns
If the total returns generated by the calculator doesn’t match with your expected returns, you can alter the value of time horizon, rate of returns and SIP amount as per your convenience. 

Following all the points, you can easily plan for your investment goal using mutual fund calculator and make it well-planned strategy.