SIP Calculator with Inflation: This tool has been developed to calculate the future valuation of mutual fund investments through a SIP (Systematic Investment Plan). You can also adjust the inflation rate according to the current inflation rate in India.
I have developed this sip calculator with inflation adjustment rate. Every investor can calculate the real valuation of their investment amount what will be in the future.
It will provide a table where users can see and assume a rough idea of their investment valuation yearly and monthly. The table also suggests more than 50 years of investment data so users can make effective long-term SIP investment plans (strategies).
What is SIP?
SIP (Systematic Investment Plan) is only a method of consistent investment in any mutual funds provided by various companies that offer different types of mutual funds.
An investor selects a mutual fund and starts investing their investment fund through SIP. If an investor invests regularly such as per month/weekly/half yearly or yearly, That is called an SIP (Systematic Investment plan)
SIP is a good option for long-term investment in mutual funds to gain higher returns over the long-term period. In which you invest a small amount of your monthly salary for future goals. that helps to set a future goal such as a car, vacation, home, and retirement. means this investment works for your planned future goal.
What is Inflation?
The inflation rate means that over time, the prices of all things go up, and the value of money goes down. So, the money you have won’t buy as much in the future as it does now. For example, if a 🖊️ pen costs ₹5 today, it might cost ₹5.50 next year because of inflation.
Currently time India’s average inflation rate is 5.09%.
How does the SIP Calculator with Inflation rate work?
Several methods can be used to calculate compound interest. Here is the most common formula.
The SIP calculator with inflation uses this compound interest formula to calculate and estimate your investments’ future value.
- P, be the initial investment amount,
- PMT is the monthly investment amount (SIP amount),
- r, be the expected annual rate of return (as a decimal),
- n, be the number of months,
- i, be the expected annual inflation rate (as a decimal).
Then, the future value (FV) of the investment adjusted for inflation can be calculated using the following formula:
Benefits of this SIP Calculator with Inflation?
- Provides a clear history of future money value considering rising prices.
- Assists in deciding how much to invest regularly and where.
- Simplifies planning for big expenses like retirement or education, and different plans.
- Guides in selecting investments that beat inflation.
- Encourages staying committed to long-term investment strategies.
- Helps avoid underestimating future financial needs.
- Enables better financial goal setting.
- Facilitates understanding of the impact of inflation on investments.
How to Use SIP Calculator with Inflation-Adjusted?
This inflation adjusted SIP calculator is straightforward to use first of all you need to know your investment plan and average annual return current inflation rate and how many years you want to invest in a mutual fund through the SIP.
- Choose your monthly investment amount.
- Select annual average return.
- Select period of investment.
- Select the inflation rate according to the current average inflation.
- Now you can see your entire investment journey.
Frequently Asked Questions:
Does inflation affect SIP?
Yes, If inflation is rising annually by 5 to 6% you should increase your investment amount per year according to inflation otherwise your acquisition future value will decrease.
Are mutual funds affected by inflation?
Yes, the Inflation rate could indeed affect mutual funds in various ways.
1. Purchasing Power Erosion
2. Interest Rates and Bond Funds
3. Stocks and Equities
4. Sectoral Impact
5. Costs and Fees
6. Tex.