SIP Calculator – Systematic Investment Plan Calculator

Prospective investors may mistakenly conflate SIPs with mutual funds, but the former is simply a means of investing in the latter. Lump sum investments represent an alternative investment method. A SIP calculator serves as a valuable resource for determining the potential returns on investments made through such tools. Systematic Investment Plans, or SIPs, involve investing a fixed amount of money in mutual funds at set intervals. SIPs typically allow for weekly, quarterly, or monthly investments.

What is a SIP Calculator?

A tool of simplicity, the SIP calculator, grants individuals a glimpse into the returns of their mutual fund investments made through SIP. As of late, investing in mutual funds through SIP has become a favored option amongst the millennial generation. These calculators for mutual fund SIPs are designed to provide potential investors with an approximation of their mutual fund investments. However, the actual returns offered by a mutual fund scheme are subject to variation based on a multitude of factors. The SIP calculator fails to offer clarification on the exit load and expense ratio, if present. Through this calculator, the wealth gain and projected returns for your monthly SIP investment will be calculated. Truly, a rough estimation of the maturity amount for any monthly SIP, based on a projected annual return rate, can be obtained.

Are you curious about the advantages of utilizing a SIP return calculator?

According to numerous mutual fund experts, SIPs are a more advantageous approach to investing funds compared to a lump sum amount. They offer financial discipline and encourage the development of savings habits that can benefit your future. An online SIP calculator is an incredibly useful tool that provides you with an estimate of your future returns after the investment tenure. Consider some of the benefits of utilizing a SIP calculator, such as assisting you in determining the amount to invest, informing you of your total investment amount, and providing an estimated value of your returns.

How do SIP calculators work?

A SIP plan calculator employs a fundamental formula that reads as follows -

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

In this formula - M signifies the amount you will receive upon maturity. P represents the amount you regularly invest. n represents the number of payments you have made. i represents the periodic rate of interest. For instance, suppose you wish to invest Rs. 1,000 every month for 12 months at a periodic rate of interest of 12%. In such a case, the monthly rate of return would amount to 12%/12 = 1/100=0.01. Thus,

M = 1,000 × {[1 + 0.01 ]{12} – 1} / 0.01) × (1 + 0.01)

This calculation amounts to approximately Rs 12,809 in a year. It is essential to note that the rate of interest on a SIP is subject to market conditions. It may fluctuate and thereby impact the estimated returns.