Most people don’t invest wrongly, it’s not that a person selects the wrong scheme, it’s that they don’t visualize enough; in about 10 seconds, with a SIP Calculator, you can correct the blind spot.
In place of visualizing, if a monthly ₹5,000 contribution will get him a comfortable lifestyle after retirement; the investor can input the values and see the curve, and in turn, derive a level of commitment that can make them meet their target
What it does, and what it doesn’t
As mentioned, the SIP Calculator is a simple tool which asks the user to input the monthly contribution, tenure, and rate of returns and outputs the value of the future corpus based on the information. However, it does not imply that the rate of return that one inputs or the calculator outputs, is a guaranteed value. Therefore, a person must understand the risks involved with the particular mutual fund scheme they are investing in before plugging in the numbers.
However, the tool does help provide an accurate directional view of the expected returns. For instance, Axis Global Innovation Fund of Fund has a 25.41% returns for the last year, but only 13.92% for the past five years; therefore, an investor would be wise to use a lower rate of return than 25.41%. With the SIP Calculator, a person can also see what a monthly contribution of ₹5,000, with a duration of 5 years, at say 10% rate of return, would get them.
The calculator is perfect for goal-setting and tracking
If an individual wants ₹1 crore after 20 years, a SIP Calculator will tell them what they need to contribute monthly, or help them visualize if they can reduce the duration or increase the quantum of contribution per month, to meet the target corpus. Additionally, the tool can help investors narrow down their options between various schemes as it provides a directional view. For instance, a pure equity fund scheme may have higher returns than an equity savings fund, but a thematic fund such as the Aditya Birla Sun Life PSU Equity Fund can provide lower returns in the short term (1Y: 3.49%), but higher returns in the medium to long-term (3Y: 17.25% 5Y: 20.09%). Therefore, an investor can use the historical data provided by a SIP Calculator to understand their risk appetite.
How much time is the biggest lever
A SIP Calculator’s biggest strength is understanding how time plays into building wealth. Whereas a contribution of ₹5,000 monthly for 30 years, at 12% rate of return, will get the investor a corpus sum of ₹1.75 crore, the same ₹5,000, if invested for 20 years would give ₹49.46 lakh, and after 10 years, ₹11.59 lakh. Therefore, time is the most critical element in determining the corpus at maturity.
And with the tool, one can understand the importance of starting early. A 21-year-old investing every month for 24 years until they reach 45 will have a corpus of ₹83.6 lakh at 12% expected returns. The monthly contribution of ₹5,000 would have a total sum of ₹14.4 lakh, with the remaining ₹69.2 lakh derived from interest.
Bringing It All Together
Angel One’s SIP calculator is free, instant, and sits right inside their mutual funds platform. They offer over 4,000 schemes with zero commission and a single dashboard to track everything. Once you’ve used the calculator to find your number, you can start or adjust your SIP in the same app without jumping between platforms.
The calculator doesn’t make you a better investor by itself. But it removes the excuse of not knowing where to start. And for most people, that’s the only hurdle that ever mattered.
