SIP Calculator
Calculate your mutual fund returns with our Systematic Investment Plan calculator
Estimated Returns
Value of your investment after 0 years
Frequently Asked Questions
A SIP calculator is a tool that helps you estimate the potential returns from your mutual fund investments made through a Systematic Investment Plan (SIP). It uses compound interest formula to project the future value of your regular investments.
SIP calculations use the principle of compound interest. The formula used is: FV = P × [({(1 + r)^n - 1} / r) × (1 + r)] where FV is future value, P is monthly investment, r is monthly return rate, and n is number of months.
No, SIP returns are not guaranteed. Mutual fund investments are subject to market risks. The calculator provides an estimate based on the expected rate of return you input, but actual returns may vary.
A SIP calculator helps you plan your investments by showing how much you need to invest regularly to reach your financial goals. It illustrates the power of compounding and helps you make informed investment decisions.
Understanding SIP and Its Benefits for Investors
Systematic Investment Plan (SIP) has revolutionized the way individuals approach mutual fund investments. By allowing investors to contribute fixed amounts at regular intervals, SIP makes investing accessible and disciplined. This comprehensive guide will help you understand how SIP works, its benefits, and how to use our SIP calculator effectively.
What is a Systematic Investment Plan (SIP)?
A Systematic Investment Plan (SIP) is an investment strategy offered by mutual funds that allows investors to contribute a fixed amount regularly (typically monthly) rather than making a lump-sum investment. This approach enables investors to participate in the market without trying to time it, potentially reducing the overall risk through rupee cost averaging.
How SIP Calculation Works
The SIP calculator uses the power of compounding to estimate the future value of your investments. The mathematical formula used is:
FV = P × [({(1 + r)^n - 1} / r) × (1 + r)]
Where:
- FV = Future Value of the investment
- P = Principal amount invested each month
- r = Expected monthly rate of return (annual rate divided by 12)
- n = Total number of months (investment period in years multiplied by 12)
Benefits of SIP Investing
SIP offers numerous advantages for investors:
- Disciplined Investing: SIP enforces financial discipline by automatically deducting a fixed amount from your bank account at regular intervals.
- Rupee Cost Averaging: By investing a fixed amount regularly, you buy more units when prices are low and fewer units when prices are high, potentially lowering your average cost per unit.
- Power of Compounding: SIP allows you to benefit from compounding, where your returns generate their own returns over time.
- Flexibility: You can start with small amounts (as low as ₹500 per month in many funds) and increase your investment gradually.
- Convenience: Once set up, SIP works automatically without requiring your constant attention.