SIP riches: A step-by-step guide to calculating your investment gains
In July 2023, Systematic Investment Plan (SIP) inflows in India exceeded a whopping ₹15,000 crore. This staggering statistic is indicative of the growing popularity of the SIP mode of investment among people. SIP has become a favored choice for many investors due to its simplicity, discipline, and potential for wealth creation. However, to truly harness the power of SIP and maximize their mutual fund returns, it is crucial to accurately calculate their investment gains.
A step-by-step guide to calculating investment returns:
1. Note down investment goals and allot asset classes to each goal:
You as an investor must categorize your goals and allocate appropriate asset classes to each goal. This practicehelps you select the right mutual funds that align with your objectives and risk tolerance.
2. Research mutual funds online and shortlist the ones preferred:
Utilize online resources, consult financial experts, and evaluate fund performance to create a shortlist of funds that match your investment goals. Diversify your investments across different fund categories to spread risk effectively.
3. Use an SIP calculator and enter the details of the SIP to calculate your returns:
SIP calculators are invaluable tools that simplify the process of estimating your wealth at the maturity date of your SIP investment. You must input key details such as the SIP amount, frequency (monthly, quarterly, etc.), expected rate of return, and the investment tenure. The calculator will then provide you with an accurate projection of your wealth over time, factoring in compounding.
4. Change the investment tenure to check the tenure that suits you best:
One of the unique benefits of SIP calculators is the ability to experiment with different investment tenures. You can determine the optimal duration for your SIPs by adjusting the tenure.
5. Keep re-assessing your investments by tracking their progress across parameters:
You must monitor and reassess your investments periodically. Observe fund performance, adjust your SIP amount if your financial situation changes, and review your asset allocation to ensure it remains in line with your goals and risk tolerance.
Here are the benefits of using an SIP calculator:
1. SIP calculators can help you plan your investments:
SIP calculators offer the convenience of tailoring your investments precisely to your financial capabilities and objectives.
2. SIP calculators can help you estimate the total value of your investment:
SIP calculators can predict the future value of your investments by taking the details of your investments as input. Investors can access these online mutual fund calculators for free by visiting the sites of banks and financial institutions.
3. SIP calculators show accurate results and help save time required during manual calculation:
You need not make complicated mathematical calculations while trying to predict the future value of your SIP investments. SIP calculators are precise, and they aid investors like youaccount for the future value of their investments by accounting for inflation.
You can align your investments with your financial goals, track your progress, and make informed decisions that will lead you on the path to SIP riches by following the step-by-step guide outlined in this article.Top of Form