SIP Calculator- Systematic Investment Plan Calculator

Many people think that Mutual funds and SIP are same, they think that they need to continiously monitor their investment when they invest in some SIP like the same they do with stocks. But SIP is slightly different from the Mutual funds. SIP is basically one of the method of investing in Mutual funds. SIP allows you to invest a fixed amount of money weekly, monthly, or quarterly in a specific mutual fund instead of investing lumpsum amount at once. Suppose you want to start your investment journey, but you have small fund available to invest then SIP is the best way for you to start investing in Mutual funds.

SIP calculator is just a handy tool that allows you to calculate the returns that you will get after a certain amount of period, at certain rate of interest. It gives you a rough estimate what amount of returns you can invest when you start investing through SIP.

What is SIP Calculator?

SIP calculator is an online tool that helps you determine or calculate the returns on your investment that you are going to invest in mutual funds, through SIP. In recent years SIP has became one of the most powerful and famous ways to invest in mutual funds, specially for millennials.

SIP calculators helps you to give a quick estimate of how your investment might grow overtime. But it is also important to remember that the mutual fund scheme final returns depends upon the market condition and several other factors. The SIP calculator just gives a rough estimate about the wealth that you can gain with your montly investment. With some basic information like the amount you are going to invest montly, rough assumed or expected rate of interest, and duration in years till which you want to invest, you can get the expected returns using the SIP calculator.

How SIP calculator helps you?

Many investors prefers SIP now a days instead of investing lumpsum amount. They think it is a great way of investing regularly as it also creates a good habit of investing and creating wealth regularly that pays off for a long run. SIP calculator helps you estimate the same final return amount that you can expect once you are at the end of your SIP target.

• It helps you how much amount you should invest as per your finanace availability.
• It shows the total amount invested by you for the duration that you choose.
• Provides estimates of return that you can expect at the end with your monthly SIP.

How SIP calculator works?

A SIP calculator helps you to estimate an expected returns that investor can get at the end of their duration with monthly investment in SIP.

It uses a simple mathematical formula to calculate the maturity value of your investment.

M=P×(i(1+i)n–1​)×(1+i)

Where M is maturity Amount, P is amount invested montly, i is monthly expected rate of return and n is duration of investment in years.

In this formula why montly return matters, it matters because many people do the mistake of directly dividing with 12, but that is not the correct method, because returns are compounded. Correct way to calculate the return on investment is by using the formula.

Monthly Return=(1+Annual Return)1/12−1\text{Monthly Return} = (1 + \text{Annual Return})^{1/12} – 1Monthly Return=(1+Annual Return)1/12−1

This makes the conclusion that at 12% annual return, the actual monthly return is around 0.95% (not 1%).

Advantage of using newsondate SIP calculator

1. It gives an idea of how much you can invest monthly and till how many years, and what returns you can expect from your investment.
2. It saves your time and effort to calculate manually and waste time in doing calculation, you can simply add your monthly investment amount, tenure of investment in years and expected rate of interest and get the idea of the amount that you can expect as return at the of your tenure.
3. It also provides you the figure of how much amount you have invested and and how much return you will get on your investment on maturity.

In short, SIP calculator helps you determine the return that you can expect on your monthly investment.

If you are new to SIP you can read this book and Learn about SIP in Hindi

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