SIP Calculator - How Does it works?
To get handsome retruns for your investment, it is essential to understand the concept of SIP Calculator.
In systematic investment approach, a compounded returns has been generated. Means every SIP after tiggered into the system starts compounding effect to your investment. This series of compounding return continues till SIP gets matured.
And therefore, this calculator works on principle of compounding. Compounding returns depends on three major factors namely Monthly Investment Amount (SIP Amount), Time Horizon - for which SIP is made, and at last but not the least is Expected Rate of Return over a period of time.
Lets understand these factors in detail hereunder:
Monthly Investment Amount:
It is the amount which investor want to invest on a periodic basis till the tenure of his investment. There is no maximum limit for SIP amount, however you can invest as low as sum of RS 500/- (Five Hundred Only).
It is the most important factor. As long the time period is, more is compounding, and therefore get higher returns. One can choose minimum 6 months as SIP tenure and again there is no maximum time limit for SIP.
Expected Rate of Return:
It is actually the growth, in terms of per-centage, that your investment grow during an entire tenure of your SIP period. You can expect as higher return as you want, but ideally it should be in the range of 10% – 15% over a long period of time.
After entering the above details, you'll get an expected amount – which is compounded, at an end of SIP tenure. Also along with this, you'll see the pie-chart which bifurcate your invested amount during the tenure and the growth shown for your expected time and rate of return.