SIP Calculator

Understanding SIP (Systematic Investment Plan)

A SIP is a disciplined way of investing where you invest a fixed sum of money at regular intervals (like once a month) in a mutual fund scheme. It is similar to a Recurring Deposit (RD) but invests in market-linked instruments like stocks or bonds.

Benefits of SIP

• Disciplined Investing: Instills a habit of regular saving.
• Flexibility: You can start with as little as ₹500 per month.
• Convenience: Automated deductions from your bank account.
• No Timing the Market: You don't need to worry about when to enter the market.

The SIP Formula

Where:

• FV = Future Value
• P = Monthly Investment Amount
• i = Periodic Interest Rate (Annual Rate / 12 / 100)
• n = Total number of payments (Years × 12)

How to Calculate SIP Returns: Example

Let's assume you invest ₹5,000 per month for 1 year at an expected return of 12% per annum.

• P (Monthly Investment): ₹5,000
• i (Monthly Rate): 12% / 12 = 1% = 0.01
• n (Months): 1 year × 12 = 12

Calculation:
FV = 5000 × [ (1 + 0.01)^12 - 1 ] × (1 + 0.01) / 0.01
FV = 5000 × [ 1.1268 - 1 ] × 101
FV = 5000 × 0.1268 × 101
FV ≈ ₹64,047

Total Invested: ₹60,000
Total Gains: ₹4,047

How to use this SIP Calculator?

1. Monthly Investment: Enter the amount you plan to invest every month.
2. Expected Return Rate: Enter the annual return percentage you expect (e.g., 12% for equity funds).
3. Time Period: Select the number of years you want to stay invested.