SIP Calculator

A Systematic Investment Plan (SIP) is a great way to invest regularly and build wealth over time. Stack’s SIP Calculator is an essential online interface for understanding the potential growth of your investments. This calculator estimates the returns on your SIP investments and provides insights into their development over time.

What is SIP?

The SIP (Systematic Investment Plan) is a disciplined investment method in mutual funds or other securities. It allows investors to secure a fixed amount regularly, usually monthly, to a mutual fund scheme. This disciplined approach to investing helps build wealth over time by taking advantage of market fluctuations through rupee cost averaging and the power of compounding. Whether you are a beginner or an experienced investor, the SIP offers a convenient way to grow your wealth systematically.

How to Use the SIP Calculator?

Using the SIP Calculator is simple. Here are the steps to estimate your potential returns:

1. Enter the Monthly SIP Amount

Enter the amount you wish to invest in the SIP every month.

2. Investment Duration

Specify the years you plan to continue the SIP.

3. Expected Annual Return

Input the expected annual rate of return on your investment.

4. Read the Outputs

Once you have inputted these details, the calculator will provide you with the following results:

• Maturity Amount: This is the total value of your investment at the end of the investment period, including returns.
• Total Investment: This represents the total amount you have invested throughout the SIP.
• Total Returns: This is the profit earned from the SIP investment.

Formula to Calculate SIP

The SIP Calculator uses an easy formula to project the growth of your investment. The formula is:

A = P*((1+i) ^ n) - 1) / i) * (1+i)

Where:

A = Maturity Amount

P = Monthly SIP Amount

i = Expected Annual Return (in decimal)

n = number of months (typically 12 for monthly SIPs)

Example of SIP Calculation

Let's see an example of how this SIP Calculator works.

Monthly SIP Amount (P): ₹5000

Investment Duration (t): 25 years

Expected Annual Return (i): 12% (0.12 in decimal form)

Number of Months (n): 12 * 25 (since it's a monthly SIP)

Formula: 

A = P * ((1+ i) ^ n) - 1) / i) * (1+i)

A = 5000 * ((1 + 0.01) ^ 300) - 1) / 0.01) * (1+0.01)

A = 5000 * ((1.01) ^ 300) - 1) / 0.01)  * (1.01)

A = 5000 * (19.78 - 1) / 0.01) * (1.01)

A = 5000 * (18.78 / 0.01) * (1.01)

A = 5000 * 1878 * 1.01

A = 94,83,900

Final Results:

Maturity Amount (A): ₹94,83,900

Total Investment: ₹15,00,000 (₹5,000 per month for 300 months)

Total Returns: ₹79,83,900 (Maturity Amount - Total Investment)

In this example, with a monthly SIP of ₹5,000 and an expected annual return of 12%, your investment could grow to ₹94,83,900 over 25 years using this formula.

SIP Investment Returns of Different Mutual Funds

Benefits of Using the SIP Calculator

Using the SIP calculator has several advantages, such as:

1. Accurate Forecasting: The calculator uses a standard formula to give you precise estimates of your investment's future value.
2. Time-Saving: Instead of manually calculating potential returns, the SIP calculator provides instant results with just a few clicks.
3. Informed Decision-Making: You can visualise different investment scenarios to choose the SIP plan that best suits your financial goals.
4. User-Friendly: The calculator is designed to be easy to use, even for those new to investing.

The SIP Calculator is helpful for anyone looking to invest in mutual funds through a systematic approach. It simplifies estimating potential returns and helps you plan your investments more effectively. Whether you're saving for retirement, a child's education, or any other financial goal, this calculator provides valuable insights into how your money can grow over time. Start using the SIP Calculator today to take control of your financial future.