SIP Calculator: When considering the potential outcomes of investing a fixed sum of money each month in a Mutual Fund SIP (Systematic Investment Plan) over a decade, it is natural for first-time investors to ponder the returns they might expect. Numerous online Mutual Fund SIP calculators, including those offered by fund managers, can provide a preliminary estimate of these returns. Utilizing such calculators can help you gauge the anticipated growth of your investment.
For instance, the SBI SIP Calculator allows users to input parameters such as the investment duration, monthly contribution, and expected rate of return to project the growth of their funds. According to this calculator, if you invest Rs 5,000 monthly for ten years at an anticipated return of 12%, then your investment amount will be Rs 6,00,000, and Rs 5,61,695 will be the estimated returns. With this your investment could accumulate to approximately Rs 11.61 lakh. Conversely, with an expected return of 10%, the total could reach around Rs 10.32 lakh.
Additionally, if you were to invest Rs 10,000 each month, your investment might grow to about Rs 20.65 lakh at a 10% return, and to approximately Rs 23.23 lakh at a 12% return.
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Is it advisable to depend on online SIP calculators?
Online Mutual Fund SIP calculators can offer a general approximation of how your investment might grow based on a predetermined expected rate of return. However, these figures are merely estimates and not definitive values, as the actual future value of investments is influenced by various factors, including market performance.
Moreover, there are instances when these online tools may not yield accurate estimates. Tax and investment expert Balwant Jain recommends that novice investors should utilize MS Excel to independently calculate the future value of their investments.
“To determine the future value of your investment, you can employ Excel. Additionally, there are financial calculators available for download that can assist in calculating the future value of your funds,” Jain says.
However, while online calculators might be useful, it is prudent to verify their results. By using the Excel FV function, you can ascertain the future value of an investment. To perform this calculation with the FV function, you must input details such as the investment duration, anticipated interest rate, and monthly payment amount.
Formula for calculation = FV (rate, nper, pmt, [pv[, [type])
In this context, Rate refers to the interest rate applicable for each period, Nper denotes the total number of payment periods, Pmt represents the payment amount for each period, Pv indicates the present value of the investment, and Type specifies the timing of the payments (whether at the beginning or the end of the year). To ensure accurate calculations, it is essential that the units for Rate and Nper are consistent.
