Systematic Investment Plan or SIP is a mutual fund facility using which you can invest fixed amounts in a mutual fund scheme at regular intervals e.g. weekly, monthly, quarterly etc through auto-debits from your savings bank account. SIP is one of the most popular ways of investing in mutual funds in India.

What is SIP Calculator?

A SIP calculator is a financial calculator which calculates how much corpus you can accumulate through a SIP over a specified investment tenure assuming a certain rate of return. There are two variants of SIP calculators (a) SIP Returns Calculator (b) Goal Based SIP Calculator

• SIP Returns Calculator: In this SIP calculator, you will enter your monthly SIP investment, your investment tenure (how many years you will invest) and the expected rate of return. The SIP calculator will estimate how much corpus you will accumulate by the end of the investment tenure
• Goal Based SIP Calculator: In this SIP calculator, you will input your financial goal amount (how much money you need to have for your financial goal), your investment tenure (after how many years you need the money for your goal) and the expected rate of return. The SIP calculator will estimate how much you need to invest on a monthly basis to meet your financial goal. Goal Based SIP Calculators may factor effect of inflation on your goals. Examples of Goal Based SIP Calculators in our web portal are Wealth Planner, House Purchase Planner, Child Education Planner, Vacation Savings Planner etc. You can use these calculators for planning different financial goals.

How does SIP Calculators work?

Here we will describe how our SIP returns calculator works. In order understand how SIP calculators work, you should familiarize yourself with the concept of compounding. You may be familiar with two types of interest – simple interest and compound interest. In simple interest, you get interest only on the principal. In compound interest, you get interest on not just the principal but also on accumulated interest. For example, if your principal is Rs 100 and compound interest rate is 6%, then in the first year, you will get Rs 6 as interest. Next year, interest will be calculated on Rs 100 + 6 = Rs 106; so you will get Rs 6.36 as interest. In the following year, interest will be calculated on Rs 106 + 6.36 = Rs 112.36; so you Rs 6.74 as interest. You can see that every year the interest you are getting is increasing; this is because you are earning interest on interest. This is known as compounding. In mutual funds, you get returns or profits on your investments. When the profits are re-invested you get profit on profits. . The formula of compounding effect for one-time investments is:- FV = P X (1 + r %)n

Where,
FV = Future Value of Investment
P = Investment Amount
r = Compounded Annual Growth Rate (CAGR) or annualized return
n = Investment tenure in years

Benefits of SIP Calculator Online

• SIP is a disciplined way of investing for your long term financial goals
• You do not need a large sum of money to invest in SIP. By investing from your regular savings through SIP you can start investing from a younger age and benefit from the power of compounding over long investment horizon
• Using our SIP calculator you can estimate how much corpus you can accumulate if you start investing a portion of your regular savings through SIPs.
• You can use our SIP calculator to see if your current savings and investments are sufficient to achieve your financial goals
• You can consider managing your expenses better, so that you can invest more through SIP for your financial goals