Why SIP frequency calculator?
SIP frequency calculator calculates the investment time according to their valuation.
Generally investor investing money in equity, mutual funds, ETF which is volatile asset, in a regular interval like as monthly, bimonthly, quarterly etc. but for extra rate of reurn over our investment, we have to invest by valuation. Suppose market in a low valuation then investor invest more money like that if market in a high valuation then investor invest less money.
But how we will know that market in a low valuation or in a high valuation. For this we will use 3-years or more historical median data of any valuation ratio like as PE ratio, PBV, Mcap/sales ratio etc which is best for us.
What is the SIP frequency calculator formula?
a= Regular SIP frequency in a days
b= Median PE ratio or PBV for Regular SIP frequency (>0)
c= Current PE ratio or PBV (>0)
Current PE ratio up or down from median PE, x= (c-b)*100/b
SIP investment frequency in days, y
If, x>0
y= a*(c/b)^(1+0.5*0.01*x)
Else,
y= a*(c/b)^(1-2*0.01*x)