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SIP Calculator – Systematic Investment Plan Calculator
Mutual funds have become one of the go-to investment options. A systematic investment plan (SIP) is a structured way to invest a fixed amount in mutual funds at regular intervals. It automates monthly contributions from your bank account, promoting financial discipline. Unlike lump-sum investments, SIPs spread investments over time, making them more accessible. A SIP calculator helps estimate potential returns based on investment frequency and duration
Mutual funds have become one of the go-to investment options. A Systematic Investment Plan (SIP) is a structured way to invest a fixed amount in mutual funds at regular intervals. It automates monthly contributions from your bank account, promoting financial discipline. Unlike lump-sum investments, SIPs spread investments over time, making them more accessible. A SIP calculator helps estimate potential returns based on investment frequency, duration, and expected returns.
How to Calculate SIP Returns Using the Formula
If you are investing in mutual funds through SIPs, a SIP calculator can help you estimate your potential returns. It follows a disciplined approach where you contribute a fixed amount at regular intervals—usually monthly—regardless of market conditions.
A SIP plan calculator works on the following formula:
M = P × ({(1 + i)^n – 1} / i) × (1 + i)
Where:- M is the maturity amount
- P is the SIP amount invested at regular intervals
- n is the number of payments (investment duration in months)
- i is the periodic interest rate (annual return % / 12 months)
Example Calculation
If you invest ₹2,000 per month for 12 months at an annual return of 12%, the monthly rate of return is:
M ≈ ₹25,618 at the end of one year.
How SIP Works with Changing NAV
One key factor in SIP investments is the Net Asset Value (NAV) of the mutual fund, which fluctuates over time. This affects the number of units you receive each month.
| Month | Investment (₹) | NAV (₹) | Units Purchased |
|---|---|---|---|
| 1 | 2,000 | 10 | 200 |
| 2 | 2,000 | 12 | 166.67 |
| 3 | 2,000 | 9 | 222.22 |
When NAV is low, you receive more units; when it is high, you receive fewer. This method, known as Rupee Cost Averaging, helps manage market fluctuations effectively. To accurately measure SIP returns, XIRR (Extended Internal Rate of Return) is used, as it accounts for varying NAVs and investment timings.
How a SIP Calculator Helps?
A SIP calculator simplifies investment planning by estimating returns based on three key inputs:
- SIP Amount: The fixed sum you invest monthly.
- Investment Duration: The number of months or years you plan to stay invested.
- Expected Rate of Return: The anticipated average return of the mutual fund.
Once you enter these details, the calculator provides an estimated corpus at the end of your investment period. This helps in setting realistic financial goals and tracking progress efficiently.
Though mutual fund investments are subject to market risks, SIP returns can be reasonably estimated. You can use Tradejini’s free SIP calculator to determine your potential returns.
How to Use Tradejini’s SIP Calculator
Planning your investments is now easier with Tradejini’s SIP calculator! This simple yet powerful tool helps you estimate your investment growth.
- Enter your investment amount
- Input your expected rate of return
- Choose your investment duration
Within seconds, the calculator will estimate your total returns, providing a hassle-free way to plan smarter and achieve your financial goals.
Frequently Asked Questions
There is no upper limit on SIP investments. You can start with as little as ₹250 per month, making it an accessible option for all investors.
SIPs offer various options to suit different investor needs:
- Regular SIP: Invest a fixed amount at regular intervals (monthly, quarterly, etc.), ensuring disciplined investing.
- Top-up/Step-up SIP: Allows you to increase your investment amount periodically (e.g., starting with ₹5,000 monthly and increasing by 10% annually).
- Flexible SIP: Lets you adjust your investment amount or frequency based on financial circumstances, ideal for those with variable incomes.
Yes, SIPs can be set for automatic renewal. Many companies offer this feature along with an option to disable auto-renewal if needed.
Yes, many mutual funds allow you to increase or decrease your contributions based on your financial situation.
How much can I invest in SIP?
There is no upper limit on SIP investments. You can start with as little as ₹250 per month, making it an accessible option for all investors.
