A Beginner’s Guide to Selecting the Right SIP Calculator

Are you a new mutual fund investor who has just started via the Systematic Investment Plan (SIP) route? Maybe you don’t need to worry about the market’s ups and downs, but do you know how much your contributions will become in the future?

Please note that such knowledge is mandatory for wealth creation as it allows you to set realistic goals. But, is there a tool to do all this? Yes, most mutual fund investors like you prefer using a “SIP calculator”. It is an online tool that instantly calculates how much wealth you could accumulate over the years.

However, given its usefulness, you will nowadays find a plethora of SIP calculators in the market. From them, you must choose the best calculator to make accurate projections. In this article, we will discuss how you can select the right SIP calculator that makes wealth creation more systematic.

1. Choose a flexible SIP calculator

Ideally, you should choose a SIP calculator that allows flexible inputs. This simply means it lets you adjust key details like how often you invest and the expected returns. Let’s see why this matters:

• Investment frequency

Some people prefer to invest monthly, while others invest quarterly or even annually. A good SIP calculator should allow you to input your preferred frequency.

For example, say you plan to invest Rs. 5,000 every month or Rs. 15,000 every quarter. Now, the calculator should adapt and show how your money will grow based on your chosen schedule.

• Varying returns

Be aware that market returns fluctuate over time. A flexible calculator lets you experiment with different expected return rates, such as 10%, 12%, or 15%. This gives you a clearer idea of how your investments will grow under both conservative and optimistic outcomes.

2. Prefer jargon-free and easy-to-use calculator

Since you have just started, you must select a SIP calculator that does not use complex financial terms. That’s because jargon can confuse you and make it harder to understand projections.

Additionally, you must lay a special focus on its user interface. A simple tool with clear labels is highly recommended. It helps you understand what details to input (like investment amount or tenure), without confusion. A clutter-free design also minimises mistakes and saves time.

3. Select a tool that offers graphical representations

Visualisation leads to better interpretations. In a recent study, it was found that the brain processed visual information 60,000 times faster than text. This improves understanding and ultimately the quality of decision-making.

Therefore, you should always look for a SIP calculator that provides visual aids like charts and graphs. Through them, you can easily visualise how your investment grows over your investment period. Here’s some common charts and graphs you should look for:

• Growth over time graph: Displays how your investment grows year by year. It clearly shows you the impact of compounding.
• Investment vs. returns chart: Compares your total contributions with the returns earned. This helps you to see the value added by investing.
• Wealth breakdown pie chart: Shows the proportion of your investment versus returns in a digestible format.
• Scenario comparison chart: Lets you compare multiple scenarios. All you have to do is adjust factors like tenure or return rate.

Additionally, if you frequently make purchases from online marketplaces or offline stores, choose a SIP calculator that generates a pie chart to clearly differentiate between your principal investment and earned interest.

4. Favour a tool with maximum compatibility

You should choose a SIP calculator that works across various devices and platforms, such as your phone, tablet, or computer. That’s because a compatible tool lets you access your calculations anytime and anywhere.

It also ensures seamless integration with other financial tools or apps you may be using. This adaptability saves time and allows you to manage your investments easily without facing technical limitations.

5. Go only after trusted sources

In India, several NBFC s, banks, and other financial institutions have released their versions of SIP calculators. Ideally, you should only use calculators from credible platforms. That’s because they are highly accurate and updated regularly as per the latest market trends. They also provide realistic suggestions by using well-researched growth rates instead of exaggerated figures.

Most importantly, such calculators prioritise data security. They lay special emphasis on safeguarding your financial inputs and personal details.

Conclusion

As a new investor, selecting the right SIP calculator is as important as choosing the right mutual fund scheme. It is recommended that you choose a tool, which is:

• Flexible
• Easy to use
• Compatible

Also, it should generate enough charts and graphs so that you can easily interpret the financial information displayed. Lastly, always choose calculators from trusted and secure sources, as they provide accurate projections and protect your data.