The Systematic Investment Plan, or SIP, has taken the country by storm with inflows in October surpassing Rs 25,000 crore for the first time. The reason for this rising popularity of SIPs is that they allow the investor to build his/her wealth over the long term and irrespective of the market conditions.
However, this appreciation of wealth becomes far more focussed and guided if one uses the goal SIP calculator instead of a plain SIP calculator. Both are freely available online. Let’s see how the goal SIP calculator helps one to achieve a particular financial goal.
Goal SIP calculator formula
As the name implies, the goal SIP calculator enables an investor to set forth a financial goal and then calculate the way forward through systematic investment plans or SIPs. For example, let us assume a person who gets a job at the age of 25, decides that he/she has to buy a house or an apartment when he/she reaches the age of 40.
If he/she uses the goal SIP calculator, he/she has to type in a few variables to determine the investment journey. The first item that one has to type in is the goal amount. In this example, one types in the figure of Rs 1 crore. Next, the calculator will ask you to type in the number of investment in years, which, in this case, is 15. The third and last variable that one has to fill in is, expected rate of return. Mutual fund calculators usually have a default built-in rate of return of 12%, but you can change it if you want.
The goal SIP calculator will tell you the amount of investment
After you have typed in all the variables, the calculator will determine the amount of SIP that you should do every month. In this case, the calculator shows that the person has to begin investing Rs 20,017 every month. If he/she continues this investment, he/she will get a value of Rs 1 crore after 15 years, or the year he/she turns 40. If the investment in mutual fund schemes can generate a higher rate of return, he/she will be able to achieve the corpus faster.
While the mutual fund SIP calculator is a useful tool, the goal SIP calculator is a far more focussed tool that can help you to charter the path of a particular financial plan. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
