SIP delay cost calculator is used to calculate how much an investor lose by delaying investment. This calculator is for Systematic Investment Plan investments. Most of the mutual fund advisors use similar calculations to show clients how delay in investments cost to them. The important principle in investments for long term is the magic of compound growth. For long term investments, initial amount gives highest returns due to compounding effect.
Let us take a simple example. If you are investing for 20 years to fund your child higher education in a systematic investment plan. Your monthly investment is Rs 5000/-. Due to busy schedule or for some other reason, you could not start your SIP for 3 months. using sip delay cost calculator you can see the effect of this delay. The 15000 (5000 per month * 3 months) will cause a loss of 2,42,666 !!!!!. Even if we calculate the present value of that money it is worth a whopping 75664 rupees (Assuming the Systematic Investment Plan you choose gave a return of 15% per year).
SIP Delay Cost Calculator
SIP Delay Cost Calculator is a simple one to calculate delay cost. Inputs required are
1) Monthly investment in Systematic Investment Plan
2) Proposed investment period in years.
3) Estimated / Expected returns from investment per year ( in %)
4) Delay in months
After calculating the cost of delay in starting investment, it is evident that even a small delay like 2-3 months will have high negative impact on total returns. In fact, the starting investment of 5 or 6 months in a 20 year period can be a huge contributor to total returns. The moral is, if you are considering investment in systematic investment plan, just start it NOW. Do not delay starting your Systematic Investment Plan. If the delay is due to doubts, lack of information contactus with your question and get reply.
We have partnered with NJ wealth advisors to offer best services and technology for mutual fund investors.
Calculator source : NJfundz