How to plan SIP investment using SIP investment calculator

Mutual Fund SIP investment offer a convenient way of investing in mutual funds systematically. Investor can choose a SIP amount based on their need, financial goals and convenience. SIP mutual fund is a popular method of beginning your investment journey in the world of mutual funds. SIP can be started online with a few clicks, its hassle free and customizable by investors based on their cash flow availability. This means that one can even decide the frequency of their investments which could be daily, monthly or quarterly over a period of time. However, monthly SIP is the most popular frequency.

While starting a SIP is easy, as an investor, you need to plan your SIPs very well using a SIP investment calculator. It is an online tool and can be used freely.

How SIP mutual fund can be planned using the SIP investment calculator

As an investor, there could be various reasons to start a SIP, it can be for a long term or short term goal, and it could be simply for saving some money regularly or for long term wealth creation. We will discuss, how for all these situations the SIP investment calculator can help.  

Meeting the various long term goals - Here taking inflation in account while planning the SIP investment is very important. Suppose, you want to build a house after 20 years and the current cost is Rs 50 Lakhs and expected return 11%. If you input the inflation (say 5%) in the calculator, the SIP investment calculator will show the future cost as Rs 1.33 Crores and for achieving that, a monthly SIP of Rs 15.350 would be required. Without accounting the inflation the SIP amount would be only Rs 5,800 but you will not be able to meet the goal of building a house. Accounting inflation for future goals is utmost important.

Simply investing the monthly surpluses – In this case you can simply input the monthly SIP amount, the SIP period and expected return in the SIP investment calculator. For example – Monthly SIP of Rs 5,000 for 20 years at 12% - the corpus amount would be Rs 49.96 Lakhs after 20 years against your total investment of Rs 12 Lakhs. As you can see inputting the inflation here is not important.

Increasing your SIP mutual fund amounts annually – Known as Step-up SIP, you can increase your SIP investment amount annually by a percentage, say 10%. Therefore, in both the above examples, if you are planning to step-up your SIPs, you should accordingly make an input in the SIP investment calculator. Taking forward the example no. 2, let us assume what would be the final corpus if the SIP amount is increased by 10% annually. The SIP calculator shows the final amount as Rs 1.16 Crores against total investment of Rs 23.40 Lakhs. This is more than double the amount just because you topped up your SIP mutual fund by 10% annually.

SIP mutual fund is a great way to invest in mutual funds. You must plan your SIP investment by using a SIP investment calculator. Accounting the inflation while preparing for long term financial goals is key to your investing success.