SIP Calculator
Calculate the estimated future value of your monthly mutual fund investments.
SIP Calculator
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Understanding Systematic Investment Plans
A Systematic Investment Plan (SIP) is one of the most effective ways to build wealth over the long term. By investing a fixed amount regularly (usually monthly), you harness the immense power of compounding.
The Magic of Compounding
Albert Einstein famously called compound interest the "eighth wonder of the world". When you invest via SIP, the returns you generate are reinvested to generate their own returns. Over a long period—like 10, 15, or 20 years—this causes exponential growth.
You can use the interactive sliders above to see how small changes in your monthly investment or an extra year of patience can drastically increase your final Total Value.
Benefits of SIPs:
- Rupee Cost Averaging: You buy more units when the market is low and fewer when the market is high, averaging out your cost per unit over time.
- Discipline: Automatic monthly deductions ensure you save before you spend.
- Flexibility: You can start with very small amounts, and pause or stop your SIP at any time without penalty.
Frequently Asked Questions
What is a SIP?
A Systematic Investment Plan (SIP) is an investment vehicle offered by many mutual funds to investors, allowing them to invest small amounts periodically instead of lump sums.
How does the SIP calculator work?
Our SIP calculator uses the future value formula for an annuity due. It calculates the compound interest gained on your monthly investments over the specified time period, assuming a constant rate of return.
Are SIP returns guaranteed?
No, SIP returns in mutual funds are subject to market risks. The expected return rate is just an estimate based on historical performance, and actual returns may vary.
Is it better to do SIP or Lump Sum?
SIPs are generally preferred for long-term wealth creation as they benefit from 'Rupee Cost Averaging' and instill financial discipline, while Lump Sums require timing the market perfectly.