Smartly achieve your financial goals with a goal-based SIP calculator. Check out this step-by-step guide to using online SIP calculators.
Investing in mutual funds, systematically and consistently, via SIP funds is one of the most effective ways to achieve your financial goals.
Coming to the pressing questions – how do you find out how much should you invest to build your required corpus? Or how do you find out the right type of funds that suit your specific requirements? How long should you stay invested? The questions are endless.
Worry not, now you can find the answers to these queries with just a few clicks. Yes, it’s that simple. Presenting you with the SIP Goal-Based Calculator.
What is the SIP Calculator?
Simply put, it’s an online tool that helps you calculate accurately the amount you have to save periodically (usually every month) to reach your financial goals. It does not just specify the amount you have to save, and for how long, some calculators even make suggestions as to the funds you should invest in, based on your risk profile, investment horizon, and other factors.
How do Goal-based SIP Calculators Work?
Step 1 – Specify your Goal
When it comes to financial goals, different people have different goals. And, very often a single person may have various goals. Choose your financial goal from the ones listed on the calculator. Some common financial goals include – wealth creation, retirement, education, tax savings, car or home purchase, marriage, honeymoon, holidays, funding a child’s education or wedding, support to parents, business expansion, capital for expansion, lifestyle improvement and more.
Choose your goal to get started.
Step 2 – More Details about your Goal
This usually includes the time when you want to achieve your goal. Based on the time frame available, the calculator then proceeds with the right type of asset allocation for you.
For instance, if saving for retirement is your goal, then it comes under long-term financial goals. On the other hand, saving for a car usually comes under short-term goals.
Along with the time frame, you have to specify the amount you need to achieve your goal. This need not be accurate. Just a rough approximation would do to help you get started.
Step 3 – Your Risk Appetite
Next, you have to input your risk appetite. This helps the calculator determine your risk profile. If you’re a conservative investor, and cannot afford taking risks, then the calculator would show you debt funds that come with low risks. On the other hand, if you have a moderate risk profile, then a hybrid or balanced fund works better for you. High-risk takers can opt for true equity funds.
Step 4 – Personal Details
This includes your current age, average annual income and the percentage you would like to save. This helps to customise the results based on your specific requirements and earning potential.
Step 5 – Finalising your Recommended Portfolio
The calculator then provides you with a customised portfolio that will help you achieve your financial goal. This includes the right asset allocation for you – how much you should invest in equity and how much in debt.
Some calculators even go a step ahead and provide you with the recommended mutual fund schemes to invest in, to achieve your financial goal in the specified time frame. Thus, SIP goal planning is an excellent tool to get a clear picture of how much to save and how to save to make your financial dreams come true.
Make use of a goal-based SIP calculator to help you choose the right mutual fund instruments suited for your specific requirements and objectives.