SIP Target Calculator

Know what this SIP Target calculator can do

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Helps bucket total monthly savings into specific amounts for each goal
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Calculates the monthly SIP needed to meet a particular financial goal

If you have a fixed sum of money as a financial goal to reach in a certain number of years, it’s necessary to know how much to save towards this target. Knowing a ballpark figure will ensure that you do not fall short of your target. This SIP target calculator takes inputs from you to calculate how much SIP you would need to invest to attain a financial goal.

What is the Target Amount SIP Calculator?

The Target Amount SIP calculator will help you know how much to invest through an SIP every month, to attain your desired goal. For certain goals, such as education or retirement, you typically know the year by which you would need the money and an estimate of how much you may need. But knowing how much wealth to build is only the first step in your investment plan. The second step is to calculate the SIP amount. Therefore, a target SIP calculator will consider your goal amount and your timeframe, applies an assumed return and calculates the SIP amount needed to reach there.

How does the SIP target calculator work?

To use the SIP target calculator, you just have to input four values:

  • Target amount: The first value is the desired financial goal amount, or the target amount that you want to achieve from the SIP.
  • Existing investments: The second value is the amount of investment you have already made towards your financial goal. Entering this value ensures that you do not allocate a higher amount than needed towards a financial goal. If you have no investments made towards your goal, you can enter zero (0).
  • SIP duration: The third value is the number of years for which you are running the SIPs or the target goal date.
  • Assumed returns: The returns you expect your investment to generate. In this value, keep in mind that putting in very high returns can be misleading as reality will be far from it. Keep your return expectations reasonable, which will make the result of the SIP target calculator more realistic and therefore more useful for you.

Once you input all the values, the SIP target calculator will help you know the amount you will have to invest every month to attain the desired goal.

Benefits of Target SIP Calculator

For most of us, there are multiple financial goals that we may have – down payment for a house, retirement, children’s education, fancy vacations, upgrading cars, redoing a home and so on. The investments you make, therefore, should be smartly allocated between these goals.

For this, it’s important to use a target amount SIP calculator. This will help you in the following ways:

  • It helps you split your investments correctly towards these different financial goals.
  • It can bring about direction to your investments, work out which goal is more important, which can be pushed back and so on. You can allocate the required amount first towards the shorter-term or more important goals, and then use the remaining savings towards the longer-term or less-important goals.
  • It will help you build the right portfolio for each goal, since different goals and different SIP amounts can have different asset allocation, risk taken on, and types of funds.

Therefore, a target SIP calculator comes in handy when answering the key question of ‘how much should I invest in mutual funds’ and understanding how to plan your savings. When using SIP target calculator or any other calculator, remember that these are estimates. How much your investment grows will depend on what returns are generated in reality. Therefore, always track your investments with tools such as the Portfolio Review Pro.

What is the formula for the Target SIP Calculator?

The SIP Target Calculator combines different formulae to arrive at the target SIP amount. This calculator considers two different aspects – one, the target amount and two, the existing investments that are already made.

The target amount SIP calculator considers the compound interest to know how much the existing investment will grow. This is a simple formula of A = P * (1+r/100)^n: where, A is the final amount you wind up with, P is the amount invested, r is the estimated rate of return and n is the number of years for which you are invested. Apart from this, the target SIP calculator uses a derivative of the above formula to arrive at the monthly SIP amount to reach the target.

How much should I invest in mutual funds

Saving and investing are the key to building wealth. However, investing blindly without knowing what you’re investing towards or answering the question of how much should I invest in mutual funds would result in directionless investment. Therefore, using calculators such as the target SIP calculator or SIP value calculator or step-up SIP calculator are all useful ways to answer how much should I invest in mutual funds.

These calculators will give you the SIP amount to invest in mutual funds for each of your goals, or will help you know how much wealth you can build if you already know how much I should invest in mutual funds.

Knowing these amounts will help you pick the right mutual funds to invest. For the best mutual funds, you can refer to our recommendation list in Prime Funds. If you want mutual fund portfolios to start investing in today, check Prime Portfolios.

However, always keep in mind that how much should I invest in SIPs is an estimate. Keep track of how your wealth is building, how far away you are from your desired target amount and adjust your SIP amount and funds accordingly.

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