Which Mutual Fund Calculator Should You Use?

There is no shortage of financial calculators available on the internet, and novice investors are sometimes bewildered by the sheer number of calculator links that appear for a simple search query like ‘sip goal calculator’ or ‘goal calculators’. So how do you choose the calculator that will accurately provide an answer to what the investor was looking for in the first place?

There are many calculators available on the Internet that can help you find answers to some of your questions. financial planning questions. But here is a list of the basic calculators that everyone should try because they will help you understand the need for a financial plan in the first place and how you should start working towards your goal. financial goals in the life.

1. inflation calculator

This calculator will help you do a reality check in life. If you think you’re doing well in life, have a steady source of income that provides a decent lifestyle while still managing to save a bit, then this calculator is in for some surprises. The inflation calculator helps you find the amount you will need in the future to cover your current expenses or how much an expense that says Rs. X after certain no. of years. Historical data shows that the inflation rate has averaged 7.7% in our country during the period from 1969 to 2013. Now you can imagine how inflation can greatly affect your savings. Therefore, you need a smart investment plan to beat inflation in the long run. Let’s take an example to simplify it. Suppose you want to buy an SUV 4 years later that costs Rs 10 lakhs today. You will need 12.16 lakhs to buy the same SUV after 4 years if inflation averages 5% over this period. Actual inflation could turn out to be higher than our guess, in which case you will need more than 12.16 lakhs. For example, if the inflation turns out to be 6% instead of 5%, you will need 12.62 lakhs for the car.

2. Target SIP Calculator

This calculator is the next one to try once you’ve figured out how much your future spending will require for a particular goal after adjusting for inflation. It could be an SUV for you or a medical degree for your teenage daughter or just a family vacation on board after a few years. The Goal SIP Calculator helps you calculate the monthly SIP amount you need to invest in a mutual fund over the target horizon so you can easily cover future spending when it comes due. You should put in the future value of your goal, the time period over which this goal must be achieved, and the rate of return you expect your investment to provide. Don’t forget to add the rate of inflation to your expected return; otherwise, you will find yourself with a large deficit when you need to meet the goal. In our example, our SUV would require 12.16 lakhs four years from now at 5% inflation. So, you can set a target amount of 12.16 lakhs, a time period of 4 years, and an expected return of 15%, which includes 5% inflation. The expected return is your expectations of the investment you are making and will vary for each person. If you are investing conservatively in a balanced fund or a fixed income fund, you should lower the expected return compared to your expectation from an equity mutual fund. The calculator gives you a monthly SIP amount of Rs 18,642 in our example. This is the amount you need to invest in a mutual fund through monthly SIP where you expect to earn a 15% annual return.

3. SIP Calculator

If you are one of those savvy investors who have already started planning your life goals and have some SIPs in place, this calculator is for you. It will tell you the future value of your SIPs and you can compare it to what the inflation calculator gives you. If the future value of your SIP turns out to be more than what the inflation calculator gave you for the same goal, you are really smart! But if the future value given by the SIP calculator turns out to be lower than what the inflation calculator shows, you really need to increase your SIP now, otherwise you will run into a shortfall when it comes time to meet your target.