SIP Calculator
1) What is a SIP calculator/lump sum investment?
A SIP calculator/lump-sum investment, or one-time investment, is an investment style in which you invest once (lump sum) and then let your invested money grow by compounding over a period.
2) SIP Calculator/Loansum Calculator kya hai?
SIP Calculator/Lump calculator You can use it to calculate the maturity value of your investment. In simpler terms, the lump sum calculator indicates the future value of an investment you make today at a specific rate of interest. For instance: You register the lump sum calculator. If you are going to invest 1 lakh rupees for 60 years at the rate of 15% interest, your future value of investments would be 43.8 cr. after 60 years.
3) How does this Lumpsum Calculator work?
Even a layman can use our lump sum SIP calculator, which is highly user-friendly. Using our Lumpsum Calculator, you just need to fill in the required inputs, such as the amount you wish to invest, the period (in years) you will stay invested, and the expected rate of return per annum you think the investment will provide. Once you input the necessary variables, the future value of your investments will be calculated.
The formula which we used in this Lumpsum Calculator is: Value = Investment*(1+R)N
4) Lumpsum Investment: When should you prefer it?
Any investment (lump sum or SIP) ideally needs to be done considering many factors such as current income, risk profile, age, tax constraints, liquidity needs, time frame, and some more specific constraints. When there is a large surplus of funds available and/or one feels that a large correction of the market is behind and the market will not fall just after investing, a lump-sum investment is preferred. A lump sum investment over a longer time helps give a compounding rate of returns.
5) What is the difference between a lump sum and SIP?
Under a lump-sum investment, one has to invest one time only, whereas in SIP, Systematic Investment Plan one has to invest a fixed amount periodically. In the lump-sum investment style, market condition matters a lot, because if the market makes a big correction after your investment, it will take you years to get back to your original investment amount. Unlike at SIP, or systematic investment, where the timing of the market does not matter as money is deployed in all kinds of market scenarios. So, return earned is weighted average return.
6) Where to park my funds for a lump sum investment?
There are several instruments that can be used for lump-sum investment, such as mutual funds, equity shares, exchange-traded funds, liquid funds, bonds, fixed deposits, etc. But again, we believe that you must choose these devices for lump-sum investment only after assessing your danger profile, financial targets, and liquidity needs seriatim.
FAQs for SIP Calculator
What is an SIP calculator?
An SIP, or Systematic Investment Plan, calculator is simply a financial tool that helps the investors to estimate the amount they would take home after a period of time by investing a certain amount regularly into mutual funds.
How does the SIP Calculator work?
The SIP Calculator is based on the compound interest formula and estimates returns as follows:
n \hspace{3mm} A = P \times \frac{(1 + r)^{n} - 1}{r} \times (1 + r) nA=P×r(1+r)n−1×(1+r)
Where:
A = Final Amount
P = Monthly Investment
r = Monthly Interest Rate (Annual Rate 12/100)
n = Number of Months
What are the inputs needed for the SIP Calculator?
You can enter the following details while using an SIP calculator:
Monthly Investment Amount
Expected Annualized Returns (%)
How Many Years You Will Hold the Investment
Does the SIP Calculator guarantee return on investment?
No, since the SIP Calculator gives the return from the past or expected return. Actual returns will vary with market conditions.
Benefits of SIP Calculator What is SIP Calculator?
A SIP calculator enables the investor:
Plan their investment goals
Explore how compounding works
[compare] investment options
Is the SIP Calculator useful for different mutual funds?
Yes, for any mutual fund, you can use an SIP calculator for it by manipulating the expected return rate based on the past performance of the fund.
Should SIPs be preferred for investment over a lump sum?
Investment in SIPs reduces risk as the ups and downs in the market are averaged out in SIP investment, but lump sum investments can be riskier but, if invested at the right time, can fetch more returns.
How often do we invest in an SIP?
While most SIPs let you invest monthly, some plans allow you to invest weekly or quarterly.
Can SIP be used for short-term investment?
SIPs are ideal for long-term (5+ years) investments as you reap the benefits of compounding. Other investment options might be better for shorter-term goals.
Can I increase or decrease the SIP amount?
Yes, a few mutual funds allow step-up SIPs, in which you increase your investments periodically. You can stop or pause your SIP whenever you want.
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