By Mohammed Naeem

Online SIP calculators help investors plan their mutual fund investments by showing them the value of their mutual fund returns at the end of the investment tenure. You as an investor are generally required to enter three values to know your returns – their investment amount, annual rate of return, and investment duration. You can change the value of any of these fields and know the ideal investment amount and duration for your SIP investment. SIP calculators also help you compare the results of several mutual fund schemes.  

Benefits of using an SIP calculator to plan your SIP investment:

Here are the key benefits of using an SIP calculator before starting an SIP investment in a mutual fund scheme:

·         Online SIP calculators account for current market conditions while calculating returns: An online SIP calculator accounts for inflation and other macroeconomic factors while calculating your mutual fund returns in the future. Hence, you need not worry about the calculator not being relevant to the present-day conditions while predicting returns in the future.

·         You can use an SIP calculator to leverage the power of compounding: You can leverage the power of SIPs to benefit from the power of compounding. SIP calculators can help you determine your SIP amount to help you estimate the value of your investment by the end of the investment period. What’s more, step-up SIP calculators help you know the amount or percentage by which you should increase your SIP contributions to grow your returns further.

·         SIP calculators can help you decide on the right investment amount and duration: You can decide on the ideal investment amount while starting an SIP investment using an SIP calculator. The tool can also help you determine the ideal investment duration based on your risk appetite.

·         You can start investing with a lower amount using an SIP calculator: SIP calculators help you make the most of the flexibility offered by SIPs. You can calculate the minimum amount that you must invest monthly to reach your investment goal using an SIP calculator.

·         The results shown by online SIP calculators are personalised: Online SIP calculators show different results to different users since every individual has a different risk appetite. These personalised results help you take the right investment decisions.

·         SIP calculators offer instant results: One of the most beneficial features of SIP calculators is their speed. These tools offer instant results, helping you resolve any queries about your investment as early as possible.

·         SIP calculators are online, free-of-cost tools accessible to everyone: Lastly, these online calculators do not charge any money for their services. You can find them on bank sites and can use them at any hour.

You must define an investment objective before using an SIP calculator to calculate your mutual fund returns. Doing so can help you gauge whether your mutual fund investment aligns with your investment goals. Since the taxation of mutual funds depends on the capital gains earned in a financial year, you can easily plan your taxes using these online tools.