SIP Calculator
Calculate your Systematic Investment Plan (SIP) returns and plan your mutual fund investments with our free SIP calculator. See how your investments grow over time!
Calculate SIP Returns
Your SIP Returns
Total Investment
₹6,00,000
Total Returns
₹5,61,695
Expected Amount
₹11,61,695
Wealth Gain Ratio
1.94
Systematic Investment Plan (SIP) - All You Need to Know
What is a SIP?
A Systematic Investment Plan (SIP) is an investment strategy offered by mutual funds where investors can put in a fixed amount at regular intervals (weekly, monthly, quarterly). It's similar to a recurring deposit but is invested in mutual funds instead of a bank. This approach allows investors to benefit from rupee cost averaging and the power of compounding.
How Does a SIP Calculator Work?
The SIP calculator uses the following formula to calculate the expected returns:
M = P × [ (1 + r)n - 1] × (1 + r) / r
Where:
M = Maturity Amount
P = SIP Investment Amount
r = Periodical Rate of Return (Annual Rate / 12)
n = Number of Payments (Investment Period in Months)
The calculator takes into account your monthly investment amount, expected rate of return, and the investment period to compute the potential maturity amount, total investment, and returns.
Benefits of SIP Investment
- Disciplined Investing: Encourages regular saving habits regardless of market conditions.
- Rupee Cost Averaging: Reduces the average cost of investments as you buy more units when prices are low and fewer when prices are high.
- Power of Compounding: Helps in generating wealth over the long term as returns earn further returns.
- Flexibility: Start with a small amount and increase your investment as your income grows.
- Affordability: Can start with as little as ₹500 per month.
- Goal-Based Investing: Easier to plan for specific financial goals like education, retirement, etc.
SIP Calculation Example
Let's understand with an example:
Monthly SIP Amount: ₹10,000
Expected Annual Return: 12%
Investment Period: 15 years
Total Amount Invested: ₹18,00,000 (10,000 × 12 × 15)
Expected Maturity Amount: ₹49,74,536
Wealth Gained: ₹31,74,536 (49,74,536 - 18,00,000)
This example demonstrates how a small monthly investment can grow significantly over time due to the power of compounding.
Year-wise SIP Growth Projection
| Year | Investment Amount | Expected Returns | Maturity Value |
|---|---|---|---|
| Year 1 | ₹60,000 | ₹4,047 | ₹64,047 |
| Year 2 | ₹1,20,000 | ₹16,216 | ₹1,36,216 |
| Year 3 | ₹1,80,000 | ₹37,538 | ₹2,17,538 |
| Year 4 | ₹2,40,000 | ₹69,174 | ₹3,09,174 |
| Year 5 | ₹3,00,000 | ₹1,12,432 | ₹4,12,432 |
| Year 6 | ₹3,60,000 | ₹1,68,785 | ₹5,28,785 |
| Year 7 | ₹4,20,000 | ₹2,39,895 | ₹6,59,895 |
| Year 8 | ₹4,80,000 | ₹3,27,633 | ₹8,07,633 |
| Year 9 | ₹5,40,000 | ₹4,34,108 | ₹9,74,108 |
| Year 10 | ₹6,00,000 | ₹5,61,695 | ₹11,61,695 |
Frequently Asked Questions
1. How much should I invest in SIP monthly?
The amount you should invest in SIP monthly depends on your financial goals, risk appetite, and income. Start with an amount you're comfortable with, even if it's small. You can increase your SIP amount as your income grows. Use our SIP calculator to determine how much you need to invest to reach your financial goals.
2. What is a good return rate for SIP?
A good return rate for SIP depends on the type of mutual fund you invest in. Typically, equity funds can deliver 12-15% returns over the long term, while debt funds may offer 7-9%. Hybrid funds usually fall somewhere in between. These are not guaranteed returns and can vary based on market conditions.
3. Is SIP better than lump sum investment?
SIP is generally better for most investors because it allows for rupee-cost averaging and systematic wealth building without requiring a large initial investment. Lump sum investments might be suitable when you have a significant amount to invest and believe the market is undervalued. Both strategies have their merits depending on market conditions and individual circumstances.
4. Can I withdraw my money from SIP anytime?
Yes, you can withdraw your money from most SIP investments anytime. However, some funds may have exit loads (1-3% penalty) if you withdraw before a certain period (usually 1 year). Additionally, equity funds held for less than 12 months are subject to short-term capital gains tax at 15%, while those held longer are taxed at 10% above ₹1 lakh of gains.
5. How accurate is the SIP calculator?
The SIP calculator provides an estimate based on the information you input. The actual returns may vary due to market fluctuations, changes in interest rates, and other economic factors. The calculator assumes a constant rate of return throughout the investment period, which rarely happens in real market conditions.
Tips for SIP Investments
Stay Invested for Long Term
SIP works best when you stay invested for the long term. The power of compounding magnifies with time. Aim for at least 5-10 years for equity investments.
Don't Time the Market
One of the biggest advantages of SIP is that you don't need to time the market. Regular investments ensure you buy at different market levels, averaging out your purchase cost.
Step-Up Your SIP
Increase your SIP amount yearly to match your rising income. Even a small annual increase of 10% can significantly boost your final corpus.