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Simply put, a Mutual Funds SIP is a Systematic Investment Plan, which is a method of investing in mutual funds on a regular and systematic basis.
Mutual funds are currently quite popular in India! The impressive performance of the Indian stock market in recent years has prompted a slew of first-time investors to contemplate investing in the equities market. Mutual funds are popular tools for equity/debt investments despite the market risk, particularly among investors who wish to profit from the stock or bond market. Still, they cannot research or watch the market on their own.
This tutorial will show you how to use Python programming to compute the returns on your mutual fund SIP investments. SIP (Systematic Investment Plan) allows you to regularly invest small sums in mutual funds.
Most investors choose to invest in mutual funds using a Systematic Investment Plan (SIP). SIPs function similarly to recurring deposits. Investors put a certain amount of money into a fund every month for a set length of time. On behalf of the investor, the fund company invests the money in the market. Depending on how well the company performs, the profits/losses happen.
Three criteria assist us in estimating how much money we can build after the investing period:
We must keep in mind that the yearly rate of return on mutual funds is not fixed. It is computed by market performance and is susceptible to market risks. As a result, it is critical to set realistic expectations and assess the different return prospects while investing.
SIPs allow you to invest in modest sums regularly (daily, monthly or quarterly). This, in turn, lessens the stress of deducting a big sum - all at once - from your bank account.
SIPs can assist you in effectively managing (evening out) market volatility. Market timing may be detrimental to your wealth and health. Instead, concentrate on ‘time in the market’ while developing money by picking the greatest mutual fund program to invest in.
Many times, a SIP works better than a one-time, lump-sum investment. This is due to the practice of averaging rupee costs.
SIPs allow you to compound your money invested since they subscribe you to investing regularly.
The following is the mathematical method for determining the expected returns of mutual fund SIP investments.
FV = P [(1+i)^n-1]*(1+i) / I
FV = Future value or the amount you get at maturity.
P = Amount you invest through SIP
i = Compounded rate of return
n= Investment duration in months
r = Expected rate of return
We can compute the future value of mutual fund SIP investments using this equation.
Here’s a Python program that takes the monthly investment amount, the number of years, and the annual rate of return as inputs and outputs the future value.
The first stage in code development is collecting all necessary user inputs, including the initial money, interest rate, and the number of years.
A = float(input("Enter the monthly SIP amount: ")) YR = float(input("Enter the yearly rate of return: ")) Y = int(input("Enter the number of years: "))
The next step is to obtain the monthly interest rate and the number of months, as the calculation requires monthly data rather than yearly data.
MR = YR/12/100 M = Y * 12
Now that we have all the necessary inputs, we just apply the mathematical formula.
FV = A * ((((1 + MR)**(M))-1) * (1 + MR))/MR FV = round(FV) print("The expected amount you will get is:",FV)
A = float(input("Enter the monthly SIP amount: ")) YR = float(input("Enter the yearly rate of return: ")) Y = int(input("Enter the number of years: ")) MR = YR/12/100 M = Y * 12 FV = A * ((((1 + MR)**(M))-1) * (1 + MR))/MR FV = round(FV) print("The expected amount you will get is:",FV)
Enter the monthly SIP amount: 100 Enter the yearly rate of return: 10 Enter the number of years: 5 The expected amount you will get is: 7808
Let us have a look at another sample output along with the code below.
Please feel free to use the calculator to compute your SIP maturity amount, and please leave any questions in the comments area.
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