What is a SIP Calculator?
A SIP (Systematic Investment Plan) calculator helps you estimate the potential returns from your regular mutual fund investments. It uses the power of compounding to project how your monthly investments can grow over time.
How to Use This SIP Calculator
Simply enter:
- Monthly Investment: Amount you plan to invest each month (e.g., ₹5,000)
- Expected Return: Average annual return you expect (e.g., 12%)
- Time Period: Duration of your investment in years (e.g., 10 years)
The calculator will show your total investment, estimated returns, and maturity value.
Why SIP Investment is Powerful
SIP offers several advantages:
- Rupee Cost Averaging: Buy more units when prices are low, fewer when high
- Disciplined Investing: Automatic monthly investments build wealth systematically
- Power of Compounding: Earn returns on your returns over long periods
- Affordable: Start with as little as ₹500 per month
SIP vs Lump Sum Investment
While lump sum investments can benefit from market timing, SIPs provide:
- Lower risk through market volatility
- Easier budgeting with fixed monthly amounts
- Better psychological comfort for new investors
SIP Investment Formula
The SIP calculation uses the future value of an annuity formula:
FV = P × [{(1 + r)n - 1} / r] × (1 + r)
Where:
- FV = Future value of SIP
- P = Monthly investment amount
- r = Expected monthly return rate (annual return/12)
- n = Total number of months (years × 12)