A SIP calculator is an online tool that is widely used by mutual fund investors to get a rough estimate of how much wealth they can build by investing regularly through a Systematic Investment Plan (SIP). Using this tool is pretty simple as all you have to do is input:

● Your monthly investment
● The duration of the SIP
● The assumed annual growth rate (return)

Instead of manually doing complicated calculations, the SIP calculator does all the work for you. Due to its usefulness, it has been established that about eight in ten investors use a fintech application like a SIP calculator for financial management. This immense popularity led several business houses to launch their own versions in the market.
As an investor, it is recommended that you only use the best SIP calculator for setting realistic targets and making accurate projections. In this article, let’s check out the three most important questions you must ask yourself while researching.

Does the calculator offer additional insights

Nowadays, a SIP calculator is not just about calculating returns. Some advanced tools provide extra insights that can significantly improve your financial planning. These additional features include detailed analyses like:

● Investment growth breakdown
These calculators show a breakup of the amount contributed by you and the returns generated. This helps you to realise how the power of compounding will help you in wealth creation.

● Goal-based planning
Some calculators let you input specific financial goals (like buying a house or funding education). After this, they suggest the SIP amount needed to achieve that goal within a given timeframe.

● Adjustable return rates
Using the tool, you can even explore various scenarios by changing the expected return rates. This gives you a clearer picture of possible outcomes.

● Tax and inflation adjustment
Advanced calculators consider the impact of taxes and inflation while calculating your returns. This provides more realistic projections of your future wealth.

● EMI estimation
If you make frequent purchases from online marketplaces or offline stores, go for a tool that accurately estimates your EMIs.

Does the calculator come from a verified source

In India, digital fraud is on the rise. As per a study conducted in May 2024, on average, about 7,000 cybercrime reports were reported daily. Therefore, it is highly recommended to choose a SIP calculator launched by popular banks, NBFCs, and service providers.

Such platforms keep your personal data safe and do not share it with scammers and hackers. Additionally, such calculators are:

● Highly accurate
Popular SIP calculators use standardised formulas. They rarely make errors or generate inaccurate results.

● Up-to-date
Calculators from known financial institutions are regularly updated based on the latest financial parameters, such as inflation rates or tax rules.

● Reliable
Such tools make recommendations that are realistic and not exaggerated. This enhances your ability to make smart financial moves.

Does the SIP calculator have a user-friendly design

A SIP calculator with complex navigation and a non-intuitive interface is a big no-no. That’s because such calculators usually confuse you and make interpretations tougher. Therefore, ideally, you should pick a tool that is user-friendly and highly accessible. Let’s understand why this matters:

● Easy to use
A simple and intuitive interface makes it easy for anyone to use. Some key features you should look at are clear input fields, drop-down menus, and step-by-step guidance.

● Mobile-friendly design
A user-friendly usually works seamlessly on smartphones, tablets, and desktops. This ensures you can use it anytime, anywhere.

● Visual representation
Most such SIP calculators often include graphs, charts, or tables. They visually display your investment's growth which makes it easier to interpret.

Conclusion

To do smart financial planning, you must choose the best SIP calculator out of the many available in the market. Ideally, you should look at whether the tool provides:

● Charts and graphs
● Goal-based planning
● Inflation and tax adjustments

Additionally, it is highly recommended that you select calculators only from reputable and verified sources. This ensures your data is safe and not misused. A user-friendly design with clear inputs is also preferred as it makes the SIP calculator easier to use.