SIP Calculator
Disclaimer : The above return calculation is only for illustrative purposes. It should not be considered as investment advice. Consult your Financial Advisor/ Financial Distributor before investing.
Regular investing is one of the best habits for achieving financial freedom. A Systematic Investment Plan (SIP) is an excellent method for accumulating wealth and staying focused on your long-term goals.
A common question among investors is: How can one calculate returns on SIP investments? The answer is simple – an online SIP calculator. This tool allows you to determine how much your monthly SIP investments will accumulate over time.
Want to know the future value of your mutual fund SIP? Use PersonalFN’s mutual fund SIP calculator. Just enter a few details like your monthly SIP amount, investment tenure, and the expected compounded rate of return from the mutual fund scheme you’re investing in. The calculator is easy to use, providing an instant calculation of your SIP’s expected value.
What is a SIP Calculator?
A SIP calculator is a powerful online tool that helps investors make informed decisions. It enables you to estimate the maturity value of your investments over time. With this tool, you can plan for major life and financial milestones, such as purchasing a dream car, financing a wedding, or planning for a comfortable retirement. You only need to enter a few details, including:
- Your SIP amount
- Number of SIP payments (in months)
- Number of installments made so far
- Expected annual rate of return
The SIP calculator is user-friendly and offers a convenient way to assess the future value of your investments. It calculates the maturity amount automatically within seconds, saving you from complex return calculations. Gone are the days when agents and relationship managers used to confuse clients with complicated calculations and unrealistic returns. The SIP calculator empowers investors to take control of their financial planning and accelerate their journey toward financial freedom.
How Does the Mutual Fund SIP Calculator Work?
The SIP calculator uses the following formula to determine the maturity value of your SIP:
FV = P * [(R * (1 + i)^n – 1) * (1 + i)] / i
Where:
- FV = Future Value
- P = SIP amount
- i = Compounded rate of return
Since returns are compounded for each investment installment, monthly SIPs will be compounded at i/12, while daily SIPs will be compounded at i/365.
For example, if your SIP amount is Rs. 10,000 for a tenure of 12 months, with a 10% annual return, the future value would be calculated as follows:
- P = 10,000
- i = 10% = (10/100)/12 = 1/120
- N = 12 months
Thus, the future value of your total Rs. 1,20,000 investment at the end of the year will be Rs. 1,26,703.
It might look complicated, but don’t worry! Thanks to technology, you don’t have to do these calculations manually. The SIP calculator will do it for you instantly, making it a free and easy-to-use tool for calculating returns on your monthly SIP contributions.
How to Use PersonalFN’s SIP Calculator?
Using PersonalFN’s SIP calculator is simple and accurate. Here’s a four-step process:
Enter your SIP amount – Specify how much you want to invest regularly. Your income and risk tolerance will determine the amount you can commit to.
Enter the SIP duration – Decide how long you want to make the SIP payments (in months).
Enter the number of installments made so far – If you’ve already started an SIP, enter how many installments you’ve made. Otherwise, input “0” if you’re starting fresh.
Enter the expected rate of return – Input the annual rate of return you expect from your SIP investments. You can adjust this rate to assess different investment scenarios.
By entering these details, the calculator will generate accurate results, allowing you to assess your investment returns.
What is SIP?
A Systematic Investment Plan (SIP) allows you to invest in mutual funds in a regular, disciplined manner. It’s similar to a recurring deposit (RD) at a bank, but instead of investing in a fixed deposit, your money is invested in mutual fund schemes, which are subject to market risks.
SIPs enable you to invest a fixed amount on a regular basis – weekly, monthly, or quarterly. This approach helps you develop a habit of regular saving, similar to how we used to save money in piggy banks as kids. Just as our savings would add up over time, SIPs work on the same principle – regular, small investments that grow over the long term.
Each month, a fixed sum is automatically debited from your bank account (via ECS or post-dated cheques) and invested in your chosen mutual fund scheme for a set period. Many Asset Management Companies (AMCs), mutual fund houses, and robo-advisors also offer the convenience of online SIP transactions, making it easier to invest and track your payments.
