How to Use a SIP Calculator to Plan Your Future Finances

Investing in mutual funds regularly, usually monthly or quarterly, is possible with a systematic investment plan (SIP). SIP calculators help investors make informed investment decisions by helping them plan their finances for the future. 

Determine Your Financial Goals

The idea of writing this article is to help you with instructions on how to use a SIP calculator to help you plan your financial future. Before learning to use a SIP calculator, you must determine your financial goals. Think about why you wish to invest your money and what you hope to achieve through that investment. Think about all of the goals you have in mind, such as saving for retirement, buying a new house or funding your children’s education.

Choose the Right Mutual Funds

The next step is choosing the right mutual funds and then investing based on your financial goals. Mutual funds are different: hybrid, debt, and equity funds. There are multiple combinations of these types of funds as well, Each one providing you with a different risk profile and return potential. We recommend doing a lot of research about the multiple mutual fund options available to you by either using online resources or consulting a financial adviser at Bajaj Finserv. 

Enter the Investment Amount and Duration

A calculator will ask you for the investment amount and duration to be evaluated once you have selected the mutual funds. Investment amount refers to the amount that you wish to invest regularly. Mutual funds are invested over a specific period of time: typically on a monthly or quarterly basis. When you use the information you get from this particular SIP calculator, the calculator can help you estimate your investment’s potential returns. 

Adjust for Inflation

Always take inflation into account when you are investing. As you already know, inflation refers to the increase in the price of services or goods with time. Inflation can also impact your investment returns since money loses its purchasing power with time. When calculating potential returns, SIP calculators allow you to adjust for inflation by factoring in the expected inflation rate.

Choose the Expected Rate of Return

Irrespective of your investment option, you can expect to earn a certain amount of return on that investment. However, variables such as fund performance, market conditions, and economic conditions can affect that rate of return. Based on your investment plans and risk appetite, the SIPcalculator Shows you the expected return rate that you could earn. For more accurate results, it is critical to choose an expected rate of return that is realistic.

Review the Results

A SIP calculator will help you to determine your potential returns based on the investment amount, Expected rate of return, duration and inflation adjustment. With the calculator, you can predict the future value of your investment and how much you would need to invest as well. It can also show you historical results, such as the amount that you have already earned. You can even adjust the amount by aligning your financial goals with your investments and then reviewing the results carefully.  Once you know your financial goals, you must choose suitable mutual funds like the UTI equity savings fund and the right investment amount.

Make Regular Investments

The last step in using this particular calculator is to make regular investments based on the calculated investment amount. You can set up a SIP with your mutual fund provider and invest the calculated amount regularly. Your financial goals can be achieved through regular investments.

To sum up, SIP calculators are an effective tool for planning your future finances and making informed investment decisions. The steps outlined above can help you choose the right mutual funds, enter the amount and duration of your investment, adjust for inflation, select a return rate, review the results, and regularly invest with a SIP calculator. Obtaining accurate results requires using a reliable SIP calculator and entering accurate information. Regularly investing and planning can help you achieve your financial goals and build wealth over time.

Investors can consider the Bajaj Finserv FD as an alternative low-risk investment, which has the potential to yield an income of 6% to 8% on deposits. Tax deductions on deposits may also be available to investors under Section 80C of the Income Tax Act. In case investors face challenges calculating their FD interest, they can use an FD calculator. However, FDs may not be as attractive as debt funds due to their lower returns.

Nancy Ahuja