What is SIP Calculator ?
SIP calculator is a simulation, which allows you to estimate the return on mutual fund investments made through SIP. Investing through SIPs in mutual funds is a popular investment option for millennials.
SIP calculators are designed to give potential investors a heads up on their mutual fund investments. However, the actual return from the mutual fund scheme varies depending on several factors. The SIP calculator does not account for the exit load and expense ratio (if any).
It is an online tool to calculate the SIP amount to achieve your financial goals, based on an expected annual return.
How Does The SIP Calculator Works ?
SIP calculators estimate potential return using the compound interest formula. The calculator takes into account the number of times compounding is applicable and estimates the potential returns.
Furthermore, the SIP calculator requires one to enter the monthly amount they want to invest, the duration of the investment (in years) and the expected rate of return on the SIP.
The online SIP calculator will automatically calculate the maturity amount and also the wealth to be gained from the mutual fund investments.
One can also choose to enter the target amount matching their financial goal and reverse calculate the monthly amount to be invested for the given tenure and rate of growth.