SIP Calculator
Calculate your mutual fund SIP (Systematic Investment Plan) returns based on monthly investment amount, expected rate of return, and investment period.
Understanding SIP Investments
A Systematic Investment Plan (SIP) is an investment strategy offered by mutual funds where investors can invest small amounts periodically instead of lump sum amounts. This approach offers the benefits of rupee cost averaging and the power of compounding.
How SIP Works
With a SIP, you invest a fixed amount at regular intervals (typically monthly) in a mutual fund scheme. This approach offers several advantages:
- Disciplined Investing: SIPs instill financial discipline by committing to regular investments.
- Rupee Cost Averaging: By investing a fixed amount regularly, you buy more units when prices are low and fewer when prices are high, potentially lowering the average cost per unit over time.
- Power of Compounding: The earlier you start investing, the more time your money has to grow through compounding.
- Affordability: You can start with amounts as low as ₹500 per month.
SIP Calculation Formula
The future value of your SIP investments is calculated using this formula:
M = P × ({(1 + r)^n - 1} / r) × (1 + r)
Where:
M = Maturity Amount
P = Monthly SIP amount
r = Periodic rate of return (annual rate ÷ 12 ÷ 100)
n = Investment duration in months
Factors Affecting SIP Returns
Investment Amount
Higher monthly investments will naturally lead to larger corpus amounts over time.
Investment Duration
The longer you stay invested, the more you benefit from compounding. Even a few extra years can significantly boost your returns.
Expected Rate of Return
Different mutual fund categories offer different potential returns based on their risk profile:
- Equity funds: Typically 12-15% (higher risk)
- Balanced/Hybrid funds: Typically 9-12% (moderate risk)
- Debt funds: Typically 6-9% (lower risk)
Tips for SIP Investing
- Start early to maximize the power of compounding
- Stay invested for the long term, especially for equity funds
- Consider increasing your SIP amount annually (SIP top-up) to align with your income growth
- Diversify your investments across different fund categories based on your risk profile
- Review your portfolio periodically, but avoid frequent changes based on short-term market movements