SIP Calculator

Money Per month(₹)
1000
Interest Rate(%)
1
Year(s)
1
1,20,000
Invested
1,20,000
Returns
1,20,000
Total
Created By: RUPAM BASAK

SIP Calculator - Systematic Investment Plan Calculator

A Systematic Investment Plan or SIP is an effective and affordable way to invest in mutual funds. With SIP, investors can make fixed, regular payments and slowly build wealth over the long term while enjoying benefits such as rupee cost averaging, diversification, compounding interest, flexibility, convenience, and professional management. Given the increasing popularity of SIPs, using a SIP Planner or SIP planning calculator is important for gaining insight into how your wealth can grow. So what exactly is an SIP Calculator, how does it work, and what benefits can it offer you? Let’s find out! 

What is a SIP Calculator?

An SIP Calculator is a financial tool which investors can use to estimate the returns on their mutual fund investments. The way it works is simple. You just need to input variables like the monthly investment amount, the investment period, and the annual expected return rate, and the mutual fund sip calculator quickly estimates and displays the future value of your investment. You can use it to experiment with different situations, understand the impact of various return rates, and plan your financial goals much better.

The main use of a SIP return calculator is to get an idea about the future value of an investment. It calculates the investment returns but does not take into account factors such as expense ratio, taxes, and exit load. 

How Can a SIP Calculator Help You?

A mutual fund sip calculator can help you in many ways:

  • A calculator splits the maturity amount into two parts. First is the amount you invested over the years, that is, the principal amount. Second is the interest earned on your investments. This gives a clear overview of your investment growth and makes it easier to make informed decisions.
  • An sip calculator online is a great SIP Planner tool as it lets you experiment and try out different scenarios. For example, you can change a metric and keep others constant, like entering different return rates associated with different categories of mutual funds to understand how it affects your investment’s future value in the same duration.
  • Even if an sip return calculator doesn’t have a built-in feature to factor in inflation, you can still account for it by adjusting the expected rate of return. Calculate the nominal rate of return by considering your target real rate of return and the current inflation rate, then use this adjusted rate in the calculator. Using an inflation-adjusted rate gives an even more accurate estimate.

How Does a SIP Calculator Work?

Calculating the future value of your investment manually can be tedious and time-consuming. But with an sip compounding calculator, it’s a breeze. All you’ve got to do is input your monthly investment amount, investment duration, and expected rate of return, and voila! The sip investment calculator does the rest. It instantly shows the results with a breakdown of your total investment (principal amount) and returns earned. 

An important point to note here is that the expected return rate you input is assumed to stay constant, which may not always match the market conditions. In real life, mutual fund investment returns are market-linked, meaning the maturity amount calculated based on entered returns might differ from the actual outcome. But despite this, a SIP calculator is invaluable for getting a rough estimate of your investment’s future value.

SIP Calculation Formula

The sip calculation formula is:

M = P * ({[1 + r]n – 1) / r} * (1 + r)

Where,

  • M denotes the future value of the investment
  • P denotes the monthly contribution amount
  • r represents the monthly return rate
  • n represents the total number of payments made over the investment period in months

Let’s take an example to understand how a sip compound interest calculator estimates the maturity amount. Suppose you plan to invest Rs. 8,000 per month and want to determine the value of your investment after 4 years, with an expected annual return of 10%. 

Here, we’re given that

  • P = Rs. 8,000 per month
  • n = 4*12 = 48 months
  • Expected annual rate of return = 10%

First, we must convert the annual rate from a percentage to a decimal = 10/100 = 0.1

To get the monthly return rate, we’ll divide this value by 12. So, 0.1/12 = 0.008333

Thus, r = 0.008333

Using formula M = P * ({[1 + r]n – 1) / r} * (1 + r)

M = 8000 * ({[1 + 0.008333]48 – 1} / 0.008333) * (1 + 0.008333)

M = 8000 * ((1.48933 – 1) / 0.008333) * 1.008333

M = 8000 * 58.72200 * 1.008333

M = 4,73,690

So if you invest Rs. 8,000 every month for four years at an expected 10% annual return rate, your investment will grow to approximately Rs. 4,73,690.

Fincart’s sip calculator can easily perform this calculation for you and give you an accurate estimate of your investment’s growth based on your inputs. Again, remember that the calculator assumes the expected return rate will remain constant throughout the investment duration, which may not necessarily reflect real-world market conditions. Fluctuations in the market are inevitable and actual returns of your mutual fund investment may vary.

Benefits of SIP Calculator

A MF sip calculator can prove to be a valuable tool for investors. Here are some benefits of using it:

  • An sip calculator india is simple to use. As you can see the calculation above is a bit complex and takes some time. With an SIP calculator, all you need to do is enter some values and get an instant result.
  • It gives you a clear picture of how your investments will grow over time. You can use it to understand how much money you will earn on the amount you want to invest.
  • An SIP calculator allows you to break the maturity amount down to view the amount invested and estimated returns separately.
  • SIP calculators are free to use, so you can enter different values to understand how your investments will perform over time in different scenarios.
  • You can also use the SIP calculator to plan for your short-, mid-, and long-term financial goals and make sure you stay on track with your investment plans.
  • The sip calculator yearly function can help you gauge your mutual fund investment performance annually, so you can easily adjust your investment strategy as needed.
  • You can even input the inflation rate in some SIP calculators to get inflation-adjusted returns. If not, you can always enter the inflation-adjusted return rate rather than the expected rate. Accounting for inflation gives a more accurate overview.

How to Use the Fincart SIP Calculator?

Fincart’s monthly sip calculator is very easy to use! Follow these simple steps to get an estimate of your potential mutual fund investment growth:

  • Step 1: Enter the monthly investment amount. This is the amount that will be automatically invested every month on the date you choose.
  • Step 2: Enter the expected annual return rate. This percentage represents the anticipated growth rate of your investment over time.
  • Step 3: Enter the investment period. This refers to the number of years you intend to stay invested.

FAQs - Mutual Fund SIP Calculator

A mutual fund sip calculator can help you in many ways:

A SIP calculator is a financial tool that allows you to calculate the future value of your mutual fund investment. You need to enter the monthly amount you plan to invest, the investment duration, and the expected return rate. Based on these inputs, the calculator will show you the estimated maturity amount.

No, SIP calculators cannot guarantee accurate future returns. To get the maturity amount, you will have to input three metrics – the investment amount, which you control, the investment duration, which you also control, and the expected return rate. The third metric is not under anyone’s control, and what you enter is only an assumed rate. The actual returns of your mutual fund investment can vary due to market volatility. If the actual returns match your expectations, then the SIP calculator will accurately reflect the growth of your investment.

The expected rate of return reflects what you assume your mutual fund investment will earn annually. There is a chance that the actual returns may differ from your expected returns, that’s why special care should be taken to use a realistic rate of return.

SIP calculators are easy to use and help you quickly estimate how much your mutual fund investment will grow based on the investment duration you want, the amount you want to contribute, and the annual returns you expect. They allow you to effectively plan your investments, visualise investment growth, and make informed decisions. You can adjust the expected rate of return to compare different types of funds, such as equity or hybrid, and see how these changes impact your investment.