SIP Calculator

What is SIP (Systematic Investment Plan)?

A Systematic Investment Plan (SIP) is a method of investing a fixed amount regularly (usually monthly) in mutual funds. It is one of the most popular investment strategies in India, allowing investors to build wealth gradually without needing a large lump sum. SIP leverages the power of compounding and rupee cost averaging, which helps reduce the impact of market volatility over time.

How to Use This SIP Calculator

1. Enter the monthly amount you plan to invest (in INR).

2. Enter the expected annual rate of return (for example, 12% for equity mutual funds).

3. Enter the time period in years for which you plan to invest.

4. Click "Calculate SIP" to see the estimated total value, amount invested and gains.

SIP Formula

The future value of a SIP is calculated using the formula: FV = M x [{(1 + r)ⁿ - 1} / r] x (1 + r), where M is the monthly investment, r is the monthly rate of return (annual rate / 12 / 100), and n is the total number of months. This formula accounts for the compounding effect on each monthly installment.

Frequently Asked Questions

What is the difference between SIP and lump sum investment?

In a SIP, you invest a fixed amount every month, which averages out the purchase cost over time (rupee cost averaging). A lump sum investment is a one-time investment of a large amount. SIP is generally better for salaried individuals who want to invest regularly without timing the market.

What return rate should I use for SIP calculation?

Equity mutual funds in India have historically delivered 10-15% annual returns over long periods, while debt funds typically return 6-8%. Use a conservative estimate for planning. Past returns do not guarantee future performance.

Can I change my SIP amount later?

Yes, most mutual fund houses in India allow you to increase, decrease, pause or stop your SIP at any time without penalty. Some funds also offer a step-up SIP option where the amount increases annually by a fixed percentage.