SIP Calculator

SIP Calculator

Monthly Investment

Expected Return Rate

%

Time Period

Yr
Estimated Returns

Invested Amount

₹6,00,000

Estimated Returns

₹5,61,695

Total Value

₹11,61,695
Created with Highcharts 11.4.8Invested AmountEstimated Returns

SIP Calculator – Systematic Investment Plan Calculator

SIP, which stands for Systematic Investment Plan, is a hassle-free way to invest in India’s growing financial market, one small step at a time.

Think of SIP as a smart way to save and grow your money. 

Consider this as an example: you pick a mutual fund scheme and invest a fixed amount, like ₹1000, at regular intervals – monthly, quarterly, or even weekly. 

But how would this help me? Is that what you are thinking? Keep reading!

You buy more units when the market is low and fewer units when it’s high. This balances out the overall cost of your investment over time.

Your investments grow not just on the initial amount but also on the returns earned. It’s like a snowball effect!

SIP automates your savings into investment by removing the guesswork and ensuring you put aside a chunk of money for your future

SIP lets you begin investing with as little as ₹100, making it perfect for any budget.

Regular SIP contributions help build a healthy corpus for your future goals, like retirement or a child’s education.

Enabling SIP as a mode of purchasing mutual funds is now quick and effortless.

Who should opt for SIP?

SIP is a perfect fit for anyone who wants to:

  • Build a habit of investing
  • Invest in the stock market without needing a large lump sum
  • Benefit from effects of compounding

Now that you understand the basics of SIPs, you might be wondering: How much can I potentially grow my money? Here’s where the SIP calculator comes in!

What is a SIP Calculator?

A SIP calculator is a valuable tool for estimating the potential returns on mutual fund investments made through a SIP.

How Does SIP Calculator Work?

A SIP calculator provides an estimate of your future earnings based on factors such as the invested amount, SIP instalment amount, investment tenure, and a projected annual return rate. 

Note: It’s important to remember that actual returns may vary depending on the specific mutual fund scheme you choose.

How to Use Share.Market’s SIP Calculator?

Here’s how the SIP calculator works:

  • Enter the monthly investment amount (what you’re contributing to your SIP)
  • Select your investment timeframe (in years)
  • Pick your expected rate of return (annual percentage growth)

Once you enter this information, the calculator will show you the projected total amount you’ll have at the end of your SIP.

This way, you can get a sense of how much your investments might grow over time.

The Mathematics Behind the SIP Calculator

The SIP calculator uses the following formula to estimate your future returns:

FV = P × ({[1 + i]^n – 1} / i) × (1 + i)

Where:

  • FV = Future value (the total amount you expect to receive at maturity)
  • P = SIP amount (your regular investment)
  • i = Expected rate of return per investment frequency (annual rate divided by the number of investment periods per year)
  • n = Number of instalments (total number of times you invest)

Let’s say you invest ₹5,000 every month (P = ₹5,000) for 3 years (n = 36 instalments, assuming monthly investment) and expect a return of 11% per year (i = 11% / 12 = 0.9167% per month).

Step 1: Calculate the interest rate per period (i)

i = 11% / 12 = 0.9167% per month 

Step 2: Calculate the number of instalments (n)

n = Investment tenure (in years) * Number of investments per year 

n = 3 years * 12 months 

n = 36 installments

Step 3: Apply the SIP formula

FV = 5,000 × ({[1 + 0.009167]^36 – 1} / 0.009167) × (1 + 0.009167)

FV ≈ ₹2,28,227.50

Based on this estimation, with a monthly SIP of ₹5,000 for 3 years at an expected return of 11% per year, you could potentially accumulate approximately ₹2,28,227.50 at maturity.

How Can You Benefit From the SIP Calculator?

Use the SIP calculator to determine the monthly SIP amount you need to achieve your financial goals within a specific timeframe.

Easily see the total amount you’ve invested over time and get an estimated value of your potential future returns.

Experiment with different investment scenarios using the calculator. This can help you make informed choices about your SIP investment strategy.

Frequently Asked Questions

What is a SIP?

A SIP (Systematic Investment Plan) allows you to invest a fixed amount regularly in a mutual fund, promoting discipline and wealth creation.

What is the difference between SIP and Mutual Funds?

SIP (Systematic Investment Plan) is a method of investing in mutual funds. It allows you to invest a fixed amount of money at regular intervals (monthly, quarterly, etc.) rather than investing a lump sum all at once. So, SIP is a way to invest in mutual funds, not a separate investment product.

How accurate are SIP calculators?

SIP calculators are helpful tools for getting a rough estimate of your potential returns, but they are not guaranteed to be accurate. The calculators use an assumed rate of return, which may not reflect the actual performance of the mutual fund. Market conditions can fluctuate, and past performance is not necessarily indicative of future results.

Does the SIP calculator factor in fees and taxes?

SIP calculators typically don’t account for fees associated with mutual funds, such as expense ratios or exit loads. They also don’t consider taxes you may incur when you redeem your investment.

Will I have to pay to use the SIP calculator?

No, SIP calculators are free to use.