SIP Calculator
Calculate your potential returns from Systematic Investment Plans
What is a SIP Calculator?
A SIP calculator is a simple tool that allows individuals to get an idea of the returns on their mutual fund investments made through SIP. SIP investments in mutual funds have become one of the most popular investment options for millennials lately.
These mutual fund SIP calculators are designed to give potential investors an estimate of their mutual fund investments. However, the actual returns offered by a mutual fund scheme vary depending on various factors. The SIP calculator does not account for exit loads and expense ratios.
This calculator will calculate the wealth gain and expected returns for your monthly SIP investment. You get a rough estimate of the maturity amount for any of your monthly SIPs, based on a projected annual return rate.
How can a SIP return calculator help you?
SIPs are considered a more disciplined mode of investing compared to lump sum investments according to several mutual fund experts. It helps you become financially disciplined and create a habit of savings that can benefit you in the future.
Financial Planning
Assists you in determining the amount you want to invest and for how long.
Visualize Returns
Shows the estimated value of returns and helps set realistic expectations.
Track Investment
Tells you the total amount you have invested over time.
Goal Setting
Helps in planning for financial goals like retirement, education, or buying a home.
How do SIP calculators work?
A SIP calculator works on the following formula:
M = P × ({[1 + i]^n – 1} / i) × (1 + i)
Where:
- M is the amount you receive upon maturity.
- P is the amount you invest at regular intervals.
- n is the number of payments you have made.
- i is the periodic rate of interest.
Example Calculation
If you want to invest ₹5,000 per month for 10 years at an annual rate of return of 12%:
- Monthly rate of return: 12%/12 = 1% = 0.01
- Number of payments: 10 years × 12 = 120 months
- M = 5000 × ({[1 + 0.01]^120 – 1} / 0.01) × (1 + 0.01)
- M ≈ ₹11,61,695 (Maturity Amount)
- Total Invested: ₹6,00,000
- Estimated Returns: ₹5,61,695
The rate of interest on a SIP will differ as per market conditions. It may increase or decrease, which will change the estimated returns.
Frequently Asked Questions
SIP (Systematic Investment Plan) is an investment method offered by mutual funds where you can invest a fixed amount regularly (monthly, quarterly, etc.) instead of making a lump sum investment. It helps in averaging the cost of investment and building wealth over time.
No, SIP returns are not guaranteed as they are subject to market risks. The returns shown by the SIP calculator are only estimates based on the projected rate of return. Actual returns may vary depending on market performance.
Yes, most mutual funds allow you to increase or decrease your SIP amount. Some funds may have a minimum amount requirement for such changes. You can also pause or stop your SIPs if needed, though some funds may charge a penalty for early termination.
In a lump sum investment, you invest a large amount at once, while in SIP you invest smaller amounts regularly over time. SIP helps in rupee cost averaging, which means you buy more units when prices are low and fewer units when prices are high, potentially reducing the overall average cost.
