What is a Gold SIP Calculator and How to Use It?
You may want to use a gold SIP calculator to determine how much return you can get by investing in gold mutual funds. It is a simple tool that will enable you to compute the estimated returns on your investment.
In other words, an SIP return calculator for gold funds lets you plan your investment by giving a rough estimate of the return on investment.
Let us take a look at the usage and benefits of this calculator.
How Does a Gold SIP Calculator Work?
The SIP calculator uses the value of the initial investment, rate of returns and maturity period to calculate the accumulated returns. The compound interest formula is used to calculate the value of SIP investment. This is given below:
A = P x [(1+r)^n-1] x (1+r)/r
Where:
- A represents the amount you will get on maturity
- P is the total value of your investment made every month
- r is the periodic rate of interest
- n is the investment duration in months
You should remember that this will only be a rough estimate, as a fund’s NAV (Net Asset Value) varies with changes in the value of underlying investments.
Calculate Your SIP Returns
Monthly Investment
Expected return rate (p.a)
%
Time Period (Years)
Invested Amount
0
Est. Returns
Total Value
How to Use the Gold SIP Calculator?
You can use the SIP calculator to view the results of your investment in gold funds. Here is how you can calculate your SIP returns with it:
- Step 1: First, decide whether you want to calculate based on your investment needs or your available funds. Then enter the monthly investment amount or the sum you wish to earn at the end of the tenure.
- Step 2: Enter the start and finish date of your investment (investment duration).
- Step 3: Enter the expected rate of return.
- Step 4: The gold SIP calculator will show the overall investment amount, estimated returns and the total portfolio value at the end of the investment duration.
Note that the values can change owing to the various market-related factors. In addition, the SIP calculator does not provide clarification about other factors affecting possible returns like expense ratio and exit load.
Benefits of Using a Gold SIP Calculator
- The gold SIP calculator is an easy to use and user-friendly tool. Potential investors using this do not have to perform any manual calculations to know the returns of investment.
- Using this tool, you can know how much you have to invest every month to reach your financial goals. You can also change values like tenure, investment amount or rate of return to look at different outcomes.
- It helps you compare different types of gold funds from various fund houses. You can use the calculator to find the best SIP gold fund to invest in.
- The calculator is available for free online. You can use this tool anytime.
What is Meant by the Term SIP?
SIP is a popular mode of investment that allows you to invest small amounts in regular intervals, be it monthly, quarterly or annually. You do not need a large sum of money to start investing in mutual funds through SIPs. You can start accumulating wealth by investing as little as Rs. 500 through an SIP.
This is a great tool to build your investment in a safe and controlled manner. As SIPs involve buying more units when the price is low and fewer when it is high, they reduce the cost of investing.
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Types of SIP Investments
These are the different options of SIPs available in the Indian market:
1. Step Up or Top Up SIPs
These allow investors to increase their SIP investment at regular intervals. Suppose one of the schemes in your mutual fund portfolio performs very well. You can increase the SIP investment amount.
2. Perpetual SIPs
When investors do not enter the end date in the SIP mandate, they opt for a perpetual SIP. However, they can stop the SIP by writing an application to the fund house.
3. Trigger SIPs
This type of SIP is suitable for experienced investors who have a proper understanding of the financial market. It sets a trigger for the SIP investment based on certain conditions like specific dates, NAV or index value.
4. Flexible SIPs
This option allows investors to increase or decrease the SIP amount at their convenience. So, when facing a cash crunch, they can skip paying a few instalments till their financial situation gets better.
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Final Word
Systematic Investment Plans are a great way for new investors to build a financial corpus for the future. It provides a host of benefits when one invests for a long time, including rupee cost averaging and compounding interest. If you want to invest in gold through this option, consider using a gold SIP calculator to plan your savings. To start an SIP, you can also choose to invest in Navi Mutual Funds. With Navi, you can start an SIP with just Rs. 500. You can do so through platforms like Zerodha, Paytm Money, and Groww, to name a few.
FAQs
Ans: SIPs involve auto-debiting a fixed amount every month from a bank account towards investment in mutual fund schemes of your choice. This makes regular investments a habit that helps small investors to grow their wealth over time.
Ans: As you invest a fixed sum at regular intervals through SIPs, fewer units are bought when prices are higher and vice versa. Over the long, this averages out the cost of purchasing units and minimises the effects of market fluctuations.
Ans: Yes, first-time investors need to complete their KYC to invest through SIPs. You can complete the e-KYC online by providing basic information like name, phone number, address and date of birth. You will also need to upload your PAN card and Aadhaar details.
Ans: Yes, fund houses give you the option to renew your SIP investment automatically. You can pause this feature by sending an application to the fund house. They also allow you to pause a limited number of SIP investments.
Ans: The primary purpose of investing in gold is to nullify the effects of economic shock. You can invest directly in the physical commodity or shares of gold mining and distribution companies through such mutual fund schemes.
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Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
