SIP Calculator – Systematic Investment Plan Calculator

Mutual Fund (MF) investments have gained significant popularity in India. The Asset Under Management of the Indian mutual funds industry has grown by nearly 160% from 2020-2024. However, in the wave of mutual fund investments, one should realise that an investment is a crucial decision and demands appropriate analysis and planning. 

Therefore, calculating potential returns, selecting suitable investment schemes, investing the correct amount and diversifying the portfolio are significant investment decisions that affect the overall value of your investments.

That is where an SIP calculator comes in. This online tool lets you estimate your mutual fund returns by entering details like monthly SIP amount, expected return rate, and investment period. You can even run multiple simulations to find the best investment plan for your financial Goal.

What is a SIP Calculator?

A SIP calculator is a user-friendly tool designed to provide individuals with an estimated return on their mutual fund investments made through SIPs. Over the years, SIP investments have emerged as a preferred investment choice, especially among millennials.

These calculators offer potential investors an idea of the returns they can expect from mutual fund investments. However, it’s important to note that the actual returns of a mutual fund scheme can vary due to factors like market conditions. Additionally, SIP calculators do not account for aspects such as exit loads or expense ratios (if applicable).

Using this calculator, you can estimate the wealth created and the expected returns for your monthly SIP investments. It offers a projection of the maturity amount based on an assumed annual return rate, helping you plan better.

How Does a SIP Calculator Help?

The tool is mainly used for ascertaining the investment amount post a desired investment period. The SIP calculator works in three simple steps:

1. It collects your input values (monthly SIP amount, tenure, and expected return rate).

2. It applies a compounding formula to calculate the future value.

3. It instantly displays your total investment and projected returns.

This tool saves time, reduces manual effort, and minimises human error.

Input Your Data!

Understanding the mechanism and elements of the SIP return calculator can help plan the investment amount or frequency according to potential returns. Here are the inputs required by the monthly SIP calculator:

• SIP Amount

It is the monthly investment amount that an investor is willing to dedicate to a specific mutual fund scheme. It can even start at INR 500. Investors should determine their income, monthly expenses, debt obligations and other specific expenses before determining the SIP amount. 

• Expected Rate Of Returns

Here, the investors add expected market returns per annum that can be earned from that specific theme. It can be affected by the market cycle, investment instrument, portfolio and capability of the fund manager to earn alpha or match the benchmark returns.

• Investment Tenure 

Investors can state the number of years for the investment. It will help determine the potential compounding factor. Moreover, the SIP returns are also affected by the number of years of investment.

Formula Used In The SIP Calculator In India

The mutual fund SIP calculator helps ascertain the compounding effect on the investment value with the formula given below:

FV = P × [ ((1 + r)^n − 1) / r ] × (1 + r)

Here,

F.V. = Investment Value after the desired number of years.

P = Preset Investment Value or monthly SIP Amount

r = Expected rate of interest per annum / (100*12)

n = Expected number of years of investment * 12

Example For SIP Returns Calculation

Ms. ABC can allocate ₹1000 monthly towards an SIP investment. A mutual fund scheme aligning with her investment options can potentially generate 8% returns per annum. She is willing to invest for 10 years. Therefore, her investment value can be calculated as follows:

I.V. = P.V.*[{((1+r)^T)-1)} / r]*(1+r)

Here, 

P.V. = 1000

r = 8/(100*12) = 0.00666667 = 0.007 approximately

T = 10*12 = 120

I.V. = 1000*[{((1+0.007)^120)-1} / 0.007]*(1+0.007)

The total investment was INR 1.2 lakhs, whereas the future investment value will be approximately INR 1.81 lakhs.

This tedious process can be simplified by using the SIP Calculator. Follow these steps to calculate the SIP returns:

1. Enter the ‘SIP Amount’ as INR 1,000.

2. Select the ‘Estimated Annual Rate of Return’ as 8%.

3. Further, enter the ‘Investment Tenure’ of 10 years.

4. The calculator will present the total investment as INR 1.2 lakhs and the future investment value as INR 1.81 lakhs. 

Therefore, SIP calculators can be an efficient tool to calculate, analyse and compare different investment options.

Benefits Of Using An SIP Investment Calculator

Financial management tools are crucial in simplifying complex calculations and making suitable investment decisions. Therefore, calculating an investment with an SIP return calculator can help investors in the following ways:

• Save time and effort for the return calculations.

• Analyse different investment plans or alter the input values to select the most suitable investment condition.

• Investors can also plan their monthly SIP based on their end financial goals with the help of an SIP calculator. It will instil disciplined investments towards the financial goal.

• It is a free tool that is easily available online. Investors can use it from an authentic source.

• Human errors are reduced with the help of the system.

• It can be used for mutual funds, stocks or corporate bond SIPs.

• Most SIP calculators are designed for mutual funds. While a similar monthly investment approach can be adopted for stocks or Corporate Bonds, the tool may not account for market fluctuations or fixed coupon structures. It’s best used for mutual fund SIP.

How The SIP Calculator By Grip Can Help You?

Financial management tools are crucial in simplifying complex calculations and making suitable investment decisions. Therefore, calculating an investment with an SIP return calculator can help investors in the following ways:

• Save time and effort for the return calculations.

• Analyse different investment plans or alter the input values to select the most suitable investment condition.

• Investors can also plan their monthly SIP based on their end financial goals with the help of an SIP calculator. It will instil disciplined investments towards the financial goal.

• It is a free tool that is easily available online. Investors can use it from an authentic source.

• Human errors are reduced with the help of the system.

• It can be used for mutual funds, stocks or corporate bond SIPs.

• Most SIP calculators are designed for mutual funds. While a similar monthly investment approach can be adopted for stocks or Corporate Bonds, the tool may not account for market fluctuations or fixed coupon structures. It’s best used for mutual fund SIPs.

Conclusion

The SIP return calculator is a financial management tool that can help calculate potential investment value. Only inputs like monthly SIP amount, projected annual returns, and investment tenure can present the desired result. It facilitates easy calculation, eliminates human error and helps personalise the investment comparison.

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