Often, calculating returns from a Step-up SIP proves to be complicated. It can take a lot of effort to manually calculate the investment amount and estimate the returns. Instead, you can calculate the possible profits from your SIP investments using a step-up calculator. You can provide a preferred step-up percentage for the calculator to use when predicting returns. This blog describes step-up SIP calculators, including what they are and how to use one.
What is a Step-Up SIP Calculator?
A systematic investment plan (SIP) enables you to make regular monthly investments into a mutual fund. The systematic approach to investing aids in rupee cost averaging and helps you average out market volatility. Additionally, you have the choice to increase your annual investments. Stepping up means raising the value of your SIP contribution by a specific percentage. After a number of years, tracking the investment amount becomes challenging. It will become overwhelming to estimate possible rewards. You can calculate the returns when you choose a step-up calculator.
You can check the possible profits from your SIP investments using a step-up SIP calculator. The calculator computes the worth of your investment after the investment duration in a matter of seconds. While calculating the SIP value for the investment length, the calculator automatically takes into account the same step-up percentage each year.
How To Use The Step-Up SIP Calculator?
It is a straightforward calculator that uses the following inputs:
- Your desired monthly SIP investment in a mutual fund is indicated by the “Monthly Investment Amount” field.
- Growth Rate: This is the rate of return you anticipate from your investments in mutual funds.
- The length of time for which you will invest in the mutual fund scheme.
- Step-Up: It represents the annual percentage growth in the value of your SIP investment throughout the investment tenure.
For instance, if you choose a step-up of 10%, your SIP amount rises by 10% annually for the duration of your investment. Simply expressed, if your monthly investment amount (SIP) is INR 10,000, it will increase to INR 11,000 (10,000 + 10% x 10,000) in the second year. The SIP amount for the third year will be INR 12,100 (11,000 + (10% x 11,000)).
You will get an output as follows:
- Total Investment Amount: The total of all SIP contributions made over the investment period
- returns of your SIP investments
- The total maturity amount that you can anticipate from your investment at the end of the investment period.
Additionally, using various growth scenarios, SIP Step-Up Calculators provide three alternative maturity amounts. Above-average returns, average returns, and below-average returns are the growth scenarios.
Additionally, you can view a visual showing the increase in your investments over the investment term.
Let us use an example to understand the Step-up SIP calculator better. Ms. Divya wants to put INR 10,000 every month into a mutual fund. She has a ten-year investment horizon. Additionally, she wants to increase her investments by 20% annually. She also anticipates a 10% growth rate from her assets.
Her maturity value after her investment period is INR 46,33,591. Potential capital gains amount to INR 15,18,549. The entire investment value is INR 31,15,042.
Benefits of Using Step-Up SIP Calculator
The advantages of using the Step-up SIP Calculator are as follows:
- Calculate Potential Profits: You can calculate the possible returns from your SIP investments. Additionally, you can compare the results before investing in a program and decide wisely.
- Saves Time: Calculating SIP (step-up) returns can be complicated and time-consuming. The calculator computes results in a matter of seconds. Consequently, you will save time and effort on difficult calculations.
- Simple to Use: Using the Step-up SIP calculator is easy. You only need to enter your monthly investment amount, the anticipated growth rate, the length of the investment, and the step-up %. Then, the calculator determines the maturity amount based on these inputs.
- Easy to Evaluate Different Investment Scenarios: You can easily change the variables, including the monthly investment amount, growth rate, investment tenure, and step-up %, in this tool to assess different investment scenarios. For instance, you can compare a plan with a larger monthly investment amount and lower interest rate with the one with a smaller monthly investment amount and higher interest rate. You can also change step up % and see which rate works for your financial goals better. The tool helps your future financial planning by helping you decide which variables suit you better.
Other Investment Alternatives
To expand your portfolio, it is always a good idea to consider various investment alternatives. Thus, your risk is reduced, and your rewards are maximized. You can make investments in safer options such as fixed deposits and government bonds. Consider investing in stocks if you have a high-risk tolerance. One of the rapidly growing investment opportunities made possible by technology is P2P lending. In the Fractional Matchmaking Peer-to-Peer Plan from LenDenClub offers up to 10–12%* annual returns on your investment.
Today’s savvy investors prefer understanding the ROI before making an investment decision. A mutual fund calculator can serve as a helpful place to start when making wise investment choices. By utilizing various mutual fund characteristics to calculate possible returns using a mutual fund calculator, investors may take full advantage of this and gain in the long run.