A Systematic Investment Plan (SIP) Calculator is an online tool for estimating the future value of your investments. Using it, you can calculate how much money you will accumulate over your investment tenure. This calculator is based on your:
- Monthly contributions
- Expected rate of return
- Investment duration
Currently, several SIP calculators in the market show how your money grows due to compounding. However, to get realistic projections and enhance your decision-making, you must choose the right SIP calculator by making a meaningful comparison.
Wondering how to do it? In this article, let’s check out some key features you must see to choose the most accurate and user-friendly tool.
1. How easy is it to use the calculator?
At first, you must see whether the SIP calculator has a simple interface that requires minimal input. It should clearly ask for primary details without confusing users, like:
- Monthly SIP amount
- Expected returns
- Investment duration
Be aware that complicated forms or excessive jargon can lead to errors or frustration. Also, an ideal tool should provide instant results without delays.
2. How accurate are the projections?
An ideal SIP calculator must deliver accurate and realistic projections of investment growth using the compounding effect. It should also separate your invested amount and returns.
Avoid calculators that provide overly optimistic figures. That’s because they can mislead your financial planning. Therefore, always double-check that the SIP calculator is giving realistic returns based on market conditions or past performance of mutual funds.
3. How much can you customise?
Always look for SIP calculators that let you customise key parameters like:
- Step-up SIP amounts
- Inflation impact
- Different expected rates of return
This flexibility allows you to simulate real-world scenarios. For example, using a step-up SIP feature, you can see how gradually enhancing your SIP will lead to an increase in your accumulated corpus.
4. Does the calculator show charts?
Visualisation simplifies the interpretation. As per a recent study, people are 323% more likely to understand directions when illustrations are used. Calculators with graphical output let you visualise how your investment grows over time.
Ideally, while comparing, see which SIP calculator shows maximum charts, such as:
- Year-by-year progress
- Investment vs. returns breakdown
- Projections for different timeframes
These charts make complex data easy to understand. Also, using them, you can compare different scenarios quickly. Hence, pick SIP calculators that show clear and interactive graphs.
5. Is the calculator compatible with both mobile and desktop?
Make sure the SIP calculator is accessible on both mobile and desktop platforms. Many investors prefer mobile devices for quick calculations. However, a desktop version is often better for detailed planning.
Compatibility across platforms gives you more flexibility. You can choose to calculate on the go or at your workstation.
6. What additional insights can you get?
Some advanced calculators go beyond basic SIP projections. They offer several advanced features like:
- Comparing investments
- EMI estimations for purchases made from online marketplaces or offline stores
- Tracking inflation-adjusted returns
- Suggesting goal-based strategies
For example, let’s consider a scenario where you are saving for your child’s education. Using an ideal SIP calculator, you can get “adjustments” to meet your target. These could be recommendations related to increasing your monthly SIP contributions or extending the investment duration to accumulate the required amount.
These added insights make the tool more than a calculator. In a way, it becomes a planning assistant.
7. How credible is the source?
Always use SIP calculators from reputable financial institutions and leading NBFCs. These tools protect your data and are regularly updated as per the latest market trends.
Please note that lesser-known tools might use outdated formulas or lack data security. They might also return projections that are unrealistic or inflated. Therefore, while comparing, always verify the source of the SIP calculator.
Conclusion
Given the high number of SIP calculators available in the market, it is important to make a meaningful comparison to choose the best. While analysing, you should focus on factors like ease of use, accurate projections, and customisation options to get realistic estimates.
Additionally, prefer calculators that provide clear visuals, such as growth charts and additional features like goal-based planning and inflation tracking. Most importantly, select a calculator from a credible source. Such SIP calculators are updated regularly and secure your data.
You may also read: What is a SIP Calculator?
