Mutual Fund Calculator Explained: Everything You Need to Know

A mutual fund calculator helps you plan how a sum might grow over time. If the plan is based on a fixed sum every month, a tool called SIP Calculator is used.

It doesn’t tell you what the market will do. It takes the data you type in and spits out a ballpark value.

What is SIP Calculator?

Systematic Investment Plan – SIP Calculator: It indicates the possible value of a Systematic Investment Plan. A SIP allows you to invest a fixed amount in Mutual Funds at regular intervals, say every month.

A one-time or lump sum plan may also be a part of a mutual fund tool. A single-payment instrument begins with one payment. A SIP tool is about a set of payments. Choose the tool that fits your style of investing.

The SIP tool requires three main inputs:

• The amount each month
• The rate you expect to get each year
• The number of years

Then it displays the total amount paid, the approximate gain, and the end value. Since the market determines fund returns, there is no guaranteed outcome.

How Does It Function ?

The tool uses compound growth on each monthly payment. The length of time each payment remains in the fund varies. The first one has a long way to grow. The last one is for a little while.

A typical formula is:

FV = P x [((1 + r)^n – 1) / r] x (1 + r)

In this expression:

• P is the amount paid monthly.
• r is the monthly rate
• n is the number of monthly payments.
• FV is the final value shown by the tool.

The tool solves the sum in seconds. You do not have to workout by hand.

Usage Instructions

Follow these steps:

• Enter the total you can afford to spend each month.
• Pick the number of years you plan to stay invested.
• Add a year rate.
• check the sum paid value and the end value
• Modify the data to attempt a new plan.

Use a rate appropriate to the type of fund and the case you are testing. Think of the rate as not being a done deal. Real returns can go up or down. The value at the end might not match the displayed value.

A very simple example

Now what if you invest ₹5,000 every month for 10 years? Your rate is 10% per year .

Your total payment will be Rs 6,00,000. The SIP Calculator shows the maturity value to be around ₹10.33 lakh with monthly growth. The profit is shown as about Rs 4.33 lakh.

This is one example of how the tool works. It does not tell you how much a fund will make.

Why use this tool ?

This tool can assist you in goal plans. It can show if a monthly total is going to hit a target. You can also try a short term and a long term. You can see what can change when you increase or decrease the monthly amount.

And it shows why time may matter. Early payments have plenty of time to grow. But the final value still depends on how fast you type.

You can use it to plan for school fees, a home fund, a trip, old age or any other goal. It turns a vague aim into a sum that can be checked monthly.

What the Result May Overlook

A basic tool may not add fund fees, tax, exit load, missed SIP dates, SIP breaks or a change in rate. Some tools also assume that all payments are made at the start of the month.

Read the scheme document before you invest. Check its aim, risk label, fees, tax rules and exit terms. The tool can help you plan, but it can’t replace fund checks.

Using Bajaj Broking SIP Calculator

Bajaj Broking has a SIP Calculator for Mutual Funds online. Enter the monthly amount, time period and rate you’d like to test. Then the tool will show you the total paid, the profit and the final value.

It is good for readers who want to test a few cases before they start a SIP. It can also help tie some target to a certain monthly amount. Check the result against your risk tolerance, investment time horizon and the rules of the scheme you select.

Conclusion

SIP Calculator is an easy tool for a monthly plan in Mutual Funds. The monthly sum, rate and time span are used in order to show a rough end value. It can help you set goals and try a budget. It cannot guarantee a return. Use the fund facts as a guide to help you select a plan that matches your goals and risk level.