How You Can Reach Your Financial Goals through SIPs

 

A Systematic Investment Plan or a SIP allows investors to invest a fixed amount every month in a mutual fund. This helps average out the purchase price, thus protecting them from investing a large amount at a high point in the market.

It is quite a popular concept among investors who use SIP calculators for ease to calculate how long it would take a SIP of a given amount to reach a specific financial goal. For instance, if your aim is to accumulate Rs 1 crore in 10 years, you need a SIP of ₹45,000 per month at a 12% return.

How Can You Reach Your Financial Goals through SIPs?

Investing in mutual funds SIPs is one of the ideal ways to invest and get decent returns. Using a good goal-based SIP calculator, you can get an approximate estimate of the amount that you would regularly require to invest to meet your financial goals.

Whether you're planning for a child's education, retirement, or purchasing an expensive asset such as a house, you can make use of a sip interest calculator that can help you get a rough estimate of the total amount of money you need to keep aside to achieve your goals within a defined period.

Let's understand this better with an example-

Mr. A is willing to invest around Rs. 50,000 a month in mutual fund SIPs and plans to gradually increase the amount by 5% every year to fulfill his goal of buying a second house by creating a total corpus of Rs 5 crore in the next 15 years.  

So, how can he do this by investing in SIPs?

First, let's understand how much corpus Mr. A can create by investing in a proposed SIP of Rs. 50,000 a month with an increase of 5% every year.

In this case, let's assume an average return of 15%- 16% on his equity mutual fund investments via SIP (based on the past returns from the mutual fund SIPs over the past few years). With this run rate, the amount of corpus Mr. A would create roughly is Rs. 3.50 crores which will not help him achieve his desired target. To be able to achieve his target of Rs. 5 crores, he has two choices-

a. Increase his stipulated amount for SIP to Rs. 60,000/- from Rs. 50,000/-  

b. Increase the annual percentage rise in the SIP figure to 10% from the initially planned 5%. 

The best strategy here would be to invest SIPs in more selected mid-caps funds with a combination of some small and large-cap schemes.

How Does the SIP Calculator Work Here?

The SIP calculator primarily works by using some important data to compute your SIP investment that you would need to make regularly. The most important steps that you need to follow while using the SIP interest calculator include-

• Enter the target amount that you would need to complete your financial goal.
• Enter the total number of years in which you would need to complete your goal setting.
• Enter the return rate expected.

Here is an example to understand the working of a sip calculator mutual fund in more detail-

Mr. X has a target amount of Rs 60 lakhs in the next ten years at an expected return rate of 12%. As soon he enters these details in the sip interest calculator, it will display the SIP amount (and lump sum amount) that Mr. X will have to invest to meet his desired financial goals.

Benefits of Using SIP Calculator

Some of the key benefits of using the goal-based SIP calculator include-

• Helps mutual fund investors strategically and efficiently plan their investments.
• Simple to use where the investor only needs to provide the financial goal details, and the calculator will automatically display the investment tenure and the results.
• The SIP calculator is an excellent tool that simplifies complex mutual fund investment calculations, thus saving a great deal of time.
• Free to use and can be used online anytime, anywhere, thus simplifying the overall investment process for existing and first-time investors.

To Conclude

PGIM India Mutual Fund offers an easy-to-use SIP calculator to help you plan for your life goals with great ease. All you need to do is feed your input in the SIP interest calculator, and based on your inputs, the calculator informs you how much amount you need to invest per month to be able to achieve your financial goals.