worldofcalcsSIP Calculator
Investment Summary
Monthly Investment
Tenure
Expected Rate
Total Invested
Estimated Gains
Future Value
Yield on Invested
Recent Calculations
Understanding SIP Investment
A Systematic Investment Plan (SIP) is a structured way to invest a fixed amount at regular intervals—usually monthly—into mutual funds or similar products. Staying consistent helps your money compound, building wealth steadily over time.
SIP Formula
The formula used to calculate the future value of SIP is:
- FV = Future Value
- P = Monthly Investment Amount
- i = Periodic Interest Rate (Annual Rate / 12 / 100)
- n = Total Number of Payments (Years × 12)
Benefits of SIP
- Rupee Cost Averaging: Invest a fixed sum regularly to buy more when prices are low and fewer when prices are high, smoothing your average purchase cost.
- Power of Compounding: Returns get reinvested, so gains can snowball across longer horizons.
- Disciplined Investing: Automatic, recurring contributions foster a savings habit and reduce emotional decision making.
How to Use This Calculator
- Enter your monthly investment amount.
- Select the investment horizon in years.
- Choose an expected annual return rate.
- Review the Investment Summary and Growth Chart for projected outcomes.
FAQs
- Minimum amount to start a SIP can be as low as ₹500 per month depending on the fund.
- Returns are computed on compounded monthly contributions; actual returns vary by fund and market.
- A long-term expected return range for equity funds is often 12–15% annually, but it is not guaranteed.
- You can usually increase your SIP amount later through top-up features offered by many funds.
Tips for Success
- Start early to benefit more from compounding.
- Stay invested for the long term to smooth market volatility.
- Review your portfolio periodically and rebalance if needed.
- Increase your SIP amount as your income grows.
Disclaimer
What is SIP?
SIP (Systematic Investment Plan) is a method of investing a fixed amount regularly in mutual funds, typically on a monthly basis. It leverages the power of compounding and rupee cost averaging — buying more units when prices are low and fewer when prices are high. SIP is one of the most popular investment methods in India for building long-term wealth.
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Where M = Maturity amount, P = Monthly SIP amount, r = Monthly rate of return (annual rate ÷ 12 ÷ 100), and n = Total number of SIP installments. This formula assumes returns are compounded monthly and each installment earns returns for its remaining tenure.
Worked Example
- Monthly SIP = ₹5,000
- Expected Annual Return = 12%
- Monthly Rate (r) = 12/12/100 = 0.01
- Investment Period = 10 years = 120 months
- M = 5,000 × [((1.01)¹²⁰ - 1) / 0.01] × 1.01
- M = ₹11,61,695 (approx.)
- Total Invested = ₹5,000 × 120 = ₹6,00,000
- Wealth Gained = ₹5,61,695