SIP Calculator

SIP stands for systematic Investment Plan, which is a systematic way of investing a fixed amount in a predetermined scheme of mutual fund at a fixed interval. SIP is a attern/style of investment not a scheme/fund or a stock. It is a method to invest periodically in a scheme of your choice…read more

5L 5Cr
5K 5L
1Year 30Years
8% 15%
Monthly SIP Amount 1,42,922
Invested Amount 1,42,922
Wealth Created 1,42,922

What is a SIP?

SIP stands for systematic Investment Plan, which is a systematic way of investing a fixed amount in a predetermined scheme of mutual fund at a fixed interval. SIP is a pattern/style of investment not a scheme/fund or a stock. It is a method to invest periodically in a scheme of your choice. In SIP, you decide the monthly amount, the date of SIP, and the scheme you want to invest in. It makes small investments easy at regular intervals enabling you to achieve your dreams. SIP enables an investor to buy units on a specific date which you choose in a month. It builds wealth in long term.
A SIP can be started with an investment amount as low as Rs. 500 on a monthly, half yearly, quarterly or annually basis. There is no maximum limit for investment in a SIP. It is a well disciplined approach for small and retail investors. It creates a habit of saving and provides a positive approach.

Benefits of SIP

  • You can make SIP investments of low amounts even of Rs 500 which increases your potential towards investments and savings without burden on your pocket. 
  • SIP is very flexible. You can increase or decrease your periodic instalments according to your needs and conditions. 
  • SIP enables you to buy more units in mutual funds periodically in which the fund manager purchases more units when prices are low. 
  • You can earn returns not only on the principal invested by you but also on the earned returns, providing you the power of compounding. 
  • You can conveniently invest through SIP by placing a standing instruction to your bank which will auto-debit the amount on a particular day from your account. It provides ease in investment. 
  • Investing in SIP also guarantees to fulfil your goals in future even when inflation elevates. 
  • SIP makes the market timings irrelevant as it creates by selecting the best mutual fund schemes to invest your money.
  • SIPs are favourable for both having good finance and also for people with lower finance as SIPs can be made for lower amounts as well. 

What is SIP Calculator?

A SIP Calculator is an online tool which helps to calculate estimated earnings at the end of a specified tenure. It helps you to arrive at the maturity amount that is receivable from a regular investment made over a specific period of time. You will have to input the amount in the calculator along with the frequency of your investment. The SIP calculator can also be used to calculate how much amount you should invest periodically in order to achieve your financial goal. The important part in investing in mutual funds is knowing how much you will gain as returns from a SIP or from a Lump Sum Investment which is made simpler and easier with SIP Calculator. You can use the calculator to know the expected returns on your investment.

Components of SIP Calculator:

  • Monthly Investment Amount- It is the monthly investment that you are willing to make in a mutual fund scheme or the targeted corpus.
  • SIP Duration- It is the time period which range from months to years for which you willing to invest in a mutual fund scheme.
  • Estimated Return Rate- It is the rate of return on your SIP investment. It is determined as per the track record of the scheme of mutual fund in which you plan to invest. The details of return rate can be obtained from the factsheet present on its funds home website. 

How to use Online SIP Calculator?

To calculate your SIP returns either on the SIP Lumpsum corpus or on SIP monthly investment amount at the end of the tenure using the online SIP Calculator follow the steps stated below:

  • Log in to the website of the mutual fund house in which you desire to invest and search for SIP Calculator.
  • Fill in your Monthly Investment amount which may range from minimum Rs500 to any amount as there is no maximum limit in SIP investment. 
  • Fill in your tenure for which you want to invest in SIP. The minimum tenure is 6 months. 
  • Fill in the rate of return on your investment which is based on the mutual fund scheme’s track record.
  • After you input the above details click on “Calculate.”
  • The calculator will calculate the output taking into consideration the inflation rate and tax on capital gains.

How Systematic Investment Plan Calculator works

SIP Calculation is based on the principle of Compound Interest. Returns are provided both on principle that you invest and earned returns. It inputs monthly investment, the tenure and interest rates to calculate the amount of return considering the inflation on interest rates. It shows a comparative study of SIP return. It works on the following formula:

M = P x ({[ 1 + i ] n – 1} / i ) x ( 1 + i )

Where M stands for Maturity Amount

             P stands for monthly instalments or the amount you invest at regular intervals

             i stands for periodic interest rate

             n stands for number of times instalments were paid or number of time payments were made

Example – Suppose you plan to invest Rs 1,000 through SIP in a mutual fund scheme with rates at 15% with inflation for a period of 5 years. The calculator will show the following calculations:

  • Your Expected Maturity Amount- Rs 75,990
  • Your Invested Amount- Rs 60,000
  • Your Wealth Gained/Earned returns- Rs 15,990
  • Assumed annual inflation rate = 6%

How to enhance your Systematic Investment Plan

You can enhance your Maturity amount by increasing the tenure of the investment or by increasing the Monthly investment. Either of these will enable you to have increased returns. Thus, investment and tenure of the investment is directly proportional to Maturity amount and returns on investment. Higher the monthly investment or longer the tenure of the loan, higher will be your maturity amount and earned interest.

Example – If you invest Rs 1,500 instead of Rs 1,000 as explained above. Your maturity amount at the same rate of interest @15% with Inflation and for same tenure of 5 years will be Rs 1,13,985 which is 1.1 lakhs (approximately). Similarly, if you increase the tenure to 8 years with other facts constant, your maturity amount will be Rs 1,40,905 which is Rs 1.4 lakh(approximately).

Benefits of SIP Calculator

  • The tool is free to use for calculations and allows you to easily compare and choose from different mutual fund schemes according to your requirements. 
  • You can change any of the variables to calculate different returns you can receive on your investments which makes the calculator dynamic and easy to use. 
  • It gives accurate and faster results.  It also provides you information on your total invested amount, along with your total SIP income and maturity amount. 
  • It helps you to capitalise your future gains and make the most out of your investments.
  • It does not require any extra details other than your monthly investment amount, the rate of interest on your investment and the tenure of your investment making it user-friendly. 
  • In case of first time investors, the online SIP Calculators makes it easier to know the nooks and cooks of investments and make an informed decision.