SIP Calculator

SIPs (systematic investment plans) are an easy method for investors to begin their mutual fund investment journey without having a lump sum capital. They allow an investor to invest small amounts systematically into a mutual fund over a long period of time.
Here, there is an online calculator that investors can use to understand the estimated returns of an SIP method of investment.

What is an SIP Calculator?

The SIP Calculator or Systematic investment plan calculator is an online financial tool that can help you calculate the returns you may earn on your SIP investments in mutual funds. It lets the user know how much they need to invest each month in order to earn a targeted corpus.
With the utilization of this calculator, you would not have to go through manual calculations. It can be used online from anywhere and at any given time.

How Can an SIP Returns Calculator Help You?

The SIP Calculator lets you choose your frequency of investments, such as monthly, or quarterly. It also lets you enter the amount you wish to invest monthly/ quarterly, the expected rate of return and the investment duration in years.
Further on, based on the provided data, it displays the amount of corpus you will have at the end of this investment tenure. It is an essential tool to analyse how much you need to invest for a certain amount of corpus, whether the investment is a suitable choice, and compare different fund's SIP investments.
Although the SIP Return Calculator is only an illustration and not the actual representation of the returns, it can be helpful to get a broad idea of how much one needs to invest every month / quarter to achieve a large corpus over a long period of time.

How Do SIP Calculators Work?

The Mutual Fund SIP Calculator works on a pre-programmed algorithm. When you enter some basic details into the calculator, the calculator gives you the return estimates of the investment plan.
You will have to enter some details in this investment calculator, such as;

• The SIP amount.
• Frequency of your SIP deposits (monthly or quarterly.)
• Expected Rate of Return per annum
• Duration of your investment in years

SIP Calculator Formula

The formula used by the SIP calculator is:
FV = P × ({[1 + i]n – 1} / i) × (1 + i)

FV = Future value.
P = SIP amount.
i = Expected rate of return per frequency period.
n = Number of instalments.

Example

You can consider the example mentioned below to understand how the calculator works:

1. our investment (Monthly): Rs. 5,000
2. Expected Rate of Return per annum: 12%
3. Your Investment Tenure: 7 Years

Your investment would be: Rs. 9 lacs

The Future value of your investment would be: Rs. 24.98 lacs

There are certain factors you will have to consider while using the SIP calculator, and they are:
- The SIP calculator presumes a consistent rate of return, which is not the real case scenario of the market.
- Since it is just an illustration, the returns estimated by the calculator, the actual return could Be vastly different from the actual return.

How to Use a Systematic Investment Plan Calculator?

The steps to use the SIP Calculator are simple, and they are enlisted below:

Step 1: Enter the SIP amount you wish to deposit.

Step 2: Choose a frequency for that deposit (monthly or quarterly.)

Step 3: Provide the expected rate of return p.a.

Step 4: Choose the investment duration.

Instantly, you can see the estimate displayed on your screen. The Systematic investment plan calculator will illustrate your investments and the future value of your investments.

Benefits of Using SIP Calculator

The SIP Investment calculator can benefit the user in many ways, and some of the primary benefits of using it are:

1. You can Get Instant Results: The calculations are not time-consuming or tedious; through this Systematic investment plan calculator, you can find instant results without waiting.
2. You Can Determine Your SIP Amount: You can compare various SIP sums and find the amount that tallies the corpus you are looking forward to.
3. Free-to-Use: The tool can be used free of cost and online from any given place or time.
4. You Get Personalized Estimations: The estimations the calculator gives you are based on your input data, which makes it a personalized outcome.
5. Exclude Possibilities of Human Error: With manual calculations, there can be a possibility of human error, which can be avoided with the utilization of this calculator.
6. You Can Plan Strategies for a SIP Investment: Through these return illustrations, you can plan how to go about your investment in the long run.

FAQs

Q1. What is an SIP calculator?

The SIP Return Calculator is an online financial tool that can help investors calculate the returns they earn on their SIP investments.

Q2. What are the demerits of the SIP calculator?

The estimations provided by the calculator are only illustrations or projections of future returns, but they are not assured. This is because mutual funds are associated with market fluctuations, and the returns are not guaranteed.

Q3. How does the SIP calculator work?

The SIP calculator works based on the values entered by the users. You need to enter the amount, frequency of investment, time duration, and return interest rate. With these inputs, the calculator will show you the estimated returns.

Q4. What is an SIP, and how does it work?

SIPs, or Systematic Investment Plans, are one of the most popular ways to invest in mutual funds. SIPs aid in the development of financial discipline and the accumulation of wealth for the future.

Q5. Is the SIP calculator free to use?

Yes, it is free of cost.