Remaining calm during market fluctuations is a difficult task. Oftentimes, investors end up taking the wrong decisions during these times. An online SIP calculator can help you as an investor remain calm during market fluctuations. Read on to know how.
What are SIP calculators?
SIP calculators are free online tools that help investors calculate their mutual fund returns over a given period. Investors must enter their investment amount, expected rate of return, and investment period to calculate this figure. You can also compare the returns offered by multiple mutual funds using an SIP calculator to select the one that offers most returns.
How can SIP calculators help you stay calm during market fluctuations?
Market volatility can lead any investor to doubt their investment choices in the past. SIPs help you inculcate an investment discipline and stay calm during market fluctuations. If you have used an online SIP calculator before investing in a fund, you will find it easier to remain calm during market fluctuations. Here is how these online tools help investors stay calm:
- SIP calculators reassure you about the power of compounding returns: The power of compounding works when the investor invests consistently over a long period. Your earnings are reinvested in the mutual fund when you make an SIP contribution towards a mutual fund. This effect, called the power of compounding, helps you generate more wealth over time.
- Monthly SIP contributions are generally low and very affordable: You can start an SIP contribution with an amount as low as â¹ 500. Therefore, you can continue your SIP contributions during a volatile market phase. Sticking to the habit of investing regularly through SIPs will bear high returns in the long run.
- SIPs offer the added benefit of Rupee-Cost Averaging: Rupee-Cost Averaging is when an investor can purchase more mutual fund units when their prices are low and fewer units when their prices are high. SIP investments offer this advantage to investors. Rupee-Cost Averaging helps you reduce your average cost.
- SIPs offer high flexibility to investors: SIP investments are extremely flexible. You can start an SIP very conveniently through a mobile app or a website. Mutual fund houses also offer convenient means to exit an ongoing SIP investment.
- SIP calculators can help you determine the ideal investment amount and duration: You can use an online SIP calculator to know your SIP amount too. Doing so can also help you know your ideal investment duration.
- Step-up SIP calculators can help you keep up with the changing nature of your investment goals: The value of investment objectives changes over time. This is a factor of inflation and oftentimes, of the requirement of the investor. A âstep-up SIP calculator' can help you know the value of your âstep-up SIPs' or increased SIPs.
How to invest in a mutual fund scheme using an SIP calculator?
You can follow a few simple steps to pick the best mutual fund scheme using an SIP calculator:
- Note down the financial objective that you wish to achieve through the mutual fund investment.
- Shortlist mutual fund schemes and compare their returns using the SIP calculator.
- Consider the tax benefits of the scheme and select the mutual fund of your choice. s
In conclusion, SIP calculators can help you plan your SIP investments efficiently, thereby helping you remain calm during market fluctuations.
