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What is an SIP Calculator?
A Systematic Investment Plan, or SIP is a smart and easy way to start your journey toward the share market. SIP provides investors with a systematic and active way to invest and build long-term wealth. Understanding “what is SIP calculator” will help you find out the performance of your money invested and other important factors related to your investment.
Through the usage of the SIP calculator, online investors calculate their returns by considering factors such as the investment amount, duration, and expected rate of return. BlinkX SIP return calculator offers simplicity and a transparent overview of your investment, making it a valuable tool for both new and experienced investors.
How Does an SIP Calculator help you?
The following is how the mutual fund SIP calculator helps you:
- Calculate the time and interest return rate: One of the prominent benefits of the SIP calculator is that it helps you estimate the rate of return required to reach desired financial targets. In addition, you can also calculate the time needed to maximize your savings with the help of a SIP return calculator.
- Compare multiple schemes: If you find the right SIP calculator online, it can quickly give you several variables so you can evaluate a SIP plan. You can use this calculator to compare multiple plans according to those variables and choose the suitable SIP scheme for you.
How to Use BlinkX’s SIP Calculator?
You can use Blinkx's SIP amount calculator with a few clicks. Simply input the monthly invested amount (the amount for which you initiated the SIP), the number of years you intend to keep invested, and the estimated rate of return. As soon as you enter the figure, the calculator will provide the approximate amount you may withdraw after your investment period is completed.
Advantages of Using BlinkX SIP Calculator
According to various mutual fund experts, SIPs offer a more profitable approach to investing funds compared to a lump sum amount. It simply helps in financial discipline and cultivating a savings habit for future benefits. An online SIP calculator proves to be a valuable tool, offering an approximation of the returns you can expect at the end of your investment tenure.
Some benefits of SIP calculators include:
- Helping you to decide the investment amount you wish to commit.
- Providing information on the total invested amount.
- Offering an estimate of the expected returns.
Types of SIP
Here are the types of Systematic Investment Plan
| SIP Type | Main Feature | Suitability | Risk and Benefit |
| Equity SIP | Invests primarily in stocks with the potential for higher returns but subject to market volatility. | Investors with higher risk appetite, long-term investment horizon, and goal for wealth creation. | Potential for the long-term increase in the value of capital and the possibility of achieving higher returns. Exposed to market risks and short-term fluctuations. |
| Debt SIP | Invests in fixed-income instruments for stable income and lower volatility. | Conservative investors seek regular income, capital preservation, lower risk, and a shorter investment horizon. | Stable returns, and acts as a hedge against market volatility. May offer relatively lower returns compared to equity SIPs. |
| Hybrid SIP | Invests funds into a combination of both stocks and bonds. | Investors seeking moderate risk exposure, regular income, and medium to long-term investment horizon. | Offers diversification benefits, the potential for capital appreciation and income generation, but also risks associated with market fluctuations. |
| ELSS | Tax-saving SIP investing mostly in equities. | Investors looking to save taxes while aiming for long-term wealth creation with a medium to long-term investment horizon. | Provides tax benefits, the potential for higher returns and compounding, subject to market risks and short-term fluctuations. |
| Sectoral SIP | Focuses on specific sectors for potential growth. | Investors with high-risk appetite, specific sectoral insights, and long-term investment horizon. | Offers the opportunity to capitalise on the growth of specific sectors but is exposed to concentrated risks associated with the chosen sector. |
| Index SIP | Replicates specific market indexes for market returns and broad exposure. | Investors seeking market returns, lower costs, and no active fund management requirements. | Provides diversification, lower expense ratios, and benchmark-like returns, but is subject to market risks and cannot outperform a tracked index. |
| Gold SIP | Invests in gold ETFs or mutual funds for portfolio diversification and hedging against inflation. | Investors looking to diversify portfolios, hedge against inflation, and invest in gold as an asset class. | A convenient and cost-effective way to invest in gold provides liquidity but is impacted by volatile gold prices in the short term. |
| International SIP | Invests in foreign securities for exposure to global markets and growth opportunities. | Investors seeking international diversification, exposure to global trends, and long-term growth. | Provides access to international markets, sectors, and currencies, the potential for higher returns but is exposed to currency risk and global market volatility. |
How do SIP Calculator Work?
The functionality of an SIP calculator is based on mathematical equations designed to incorporate the compound interest accumulated during SIP investments. The formula it uses is:
FV = P [ (1+i)^n-1 ] * (1+i)/i
This formula represents the following variables:
| FV | Future Value |
| P | Represents the regular investment amount |
| i | Denotes the rate of return |
| N | Stands for the number of installments |
Consider a scenario where you intend to allocate ₹10,000 every month for 7 years with an anticipated annual rate of return of 12%.
In this case, the monthly rate of return can be calculated as 12% divided by 12%/ 12 = 0.1
Hence, FV = 10,000 ({[1 + 0.01] 84 - 1 } / 0.01) x (1 + 0.01)
Under these conditions, your accumulated fund would amount to ₹13.19 lakhs.
Mistakes to Avoid While Making a Systematic Investment Plan
The following is the breakdown of several mistakes that investors should avoid to get a positive output with the SIP calculator online:
- Avoid delays: Delaying investing through SIP might reduce the chances of experiencing the potential advantages of compounding over time.
- Avoid stopping SIP: It is a good practice if you do not stop SIP midway, as SIPs give their potential better returns mostly at the end of the holding period. If you are thinking of investing to create long-term wealth, and want to know how your savings grow over time, you may use the step-up SIP calculator.
- Don’t invest with unclear knowledge and research: Choosing a fund without appropriate research and detailed understanding may lead you to invest in a fund’s SIP that is not in keeping with your desires. It is critical to investigate and pick out SIPs based on funding goals, risk tolerance, and historical performance.
- Avoid excessive investing: Investing beyond one’s capacity may result in financial pressure. Setting practical goals and affordable SIP amounts allows consistency in the process and leads to better end output.