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SIP Calculator

Calculate the future value of your Systematic Investment Plan (SIP) and understand how regular investments can grow your wealth over time.

Enter the amount you plan to invest monthly (minimum ₹500)
Duration of your SIP in years (1-40 years)
Expected rate of return per annum (1-30%)
Annual increase in investment amount (optional, 0-20%)

How to Use This Calculator

  1. Enter your monthly investment amount (minimum ₹500)
  2. Specify the investment period in years
  3. Input the expected annual return rate
  4. Optionally, add an annual step-up percentage to increase your investment each year
  5. Select the compounding frequency
  6. Click Calculate to see your potential returns

Formula Used

FV = P × ({[(1 + r)^n] - 1} / r) × (1 + r)

Where:

  • FV = Future Value of the investment
  • P = Periodic investment amount
  • r = Expected rate of return per period
  • n = Number of periods

Example Calculation

Real-World Scenario:

Rahul wants to invest ₹5,000 monthly for 10 years with an expected annual return of 12%.

Given:

  • Monthly Investment (P) = ₹5,000
  • Investment Period = 10 years (120 months)
  • Expected Annual Return = 12% (1% monthly)
  • Compounding Frequency = Monthly

Calculation:

FV = 5000 × ({[(1 + 0.01)^120] - 1} / 0.01) × (1 + 0.01)

FV = 5000 × ({[3.300] - 1} / 0.01) × 1.01

FV = 5000 × 230 × 1.01 = ₹11,61,500

Result: Rahul's investment of ₹6,00,000 (5000 × 120) will grow to approximately ₹11,61,500, generating a wealth gain of ₹5,61,500.

Why This Calculation Matters

Practical Applications

  • Planning for long-term financial goals like retirement
  • Building a corpus for children's education
  • Creating wealth for major life purchases

Key Benefits

  • Power of compounding works in your favor
  • Disciplined investing approach
  • Rupee cost averaging reduces market timing risk

Common Mistakes & Tips

Many investors forget to account for inflation when planning their investments. If your expected return is 12% and inflation is 6%, your real return is only 6%. Always consider inflation when setting your investment goals and expected returns.

Market volatility is normal, and stopping your SIP during downturns means you miss out on buying more units at lower prices. This reduces the potential for higher returns when markets recover. Stay invested for the long term to benefit from rupee cost averaging.

As your income grows, you should increase your SIP amount accordingly. Even a small annual increase can significantly boost your corpus in the long run due to the power of compounding. Use the step-up feature in this calculator to see the impact.

Frequently Asked Questions

A Systematic Investment Plan (SIP) is an investment method that allows you to invest a fixed amount regularly in mutual funds. It helps inculcate financial discipline and benefits from rupee cost averaging and the power of compounding.

SIP helps in wealth creation through two main mechanisms: rupee cost averaging (buying more units when prices are low and fewer when prices are high) and compounding (earning returns on your returns). Over the long term, these factors can significantly grow your investment.

Both SIP and lumpsum have their advantages. SIP is generally better for most investors as it reduces market timing risk and inculcates investment discipline. However, if you have a large amount to invest and markets are at low levels, lumpsum might generate higher returns. A combination of both can also be considered.

The ideal duration for an SIP depends on your financial goals, but generally, longer durations work better with SIPs. Most financial advisors recommend staying invested for at least 5-7 years to see significant benefits from compounding. For long-term goals like retirement, 15-20 years or more is ideal.

References & Disclaimer

Financial Disclaimer

This calculator provides estimates based on the information provided and assumes a constant rate of return. Actual returns may vary due to market fluctuations, fund performance, and other factors. Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing. This calculator is for informational purposes only and should not be considered as financial advice.

References

Accuracy Notice

The calculations in this SIP calculator are based on standard formulas and do not account for factors like entry/exit loads, fund management fees, or tax implications. The actual returns may differ from the estimated values. Please consult with a qualified financial advisor before making any investment decisions.

About the Author

Kumaravel Madhavan

Web developer and data researcher creating accurate, easy-to-use calculators across health, finance, education, and construction and more. Works with subject-matter experts to ensure formulas meet trusted standards like WHO, NIH, and ISO.

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