SIP Calculator: Plan Your Investments with Precision

What is a SIP?

Systematic Investment Plan (SIP) is a disciplined investment approach that lets you invest a fixed amount at regular intervals instead of a lump sum. SIPs help average out the cost of investments and harness the power of compounding.

How SIP Works

With SIP, your money is used to purchase mutual fund units at the current Net Asset Value (NAV). Over time, you buy more units when prices are low and fewer when they are high—a strategy known as rupee cost averaging.

Benefits of SIP

Disciplined Investing: Promotes regular savings habits.
Rupee Cost Averaging: Mitigates the impact of market volatility.
Power of Compounding: Enables earnings on accumulated returns over time.
Flexibility: Start small and increase contributions as income grows.

SIP Calculation Formula

FV = P × [(1 + r)ⁿ - 1] / r × (1 + r)

FV: Future Value
P: Monthly investment amount
r: Expected monthly return rate (annual rate ÷ 12)
n: Total number of months (years × 12)

Example Calculations

Example 1: Basic SIP Calculation

Investing ₹5,000 per month for 10 years at an annual return of 12%:
Monthly Return Rate (r) = 12% ÷ 12 = 0.01
Total Months (n) = 10 × 12 = 120
FV = 5,000 × [(1 + 0.01)¹²⁰ - 1] / 0.01 × (1 + 0.01) = ₹11,61,695

Example 2: Increasing SIP Amount

If you start with ₹5,000/month and increase your contribution by 10% annually:
Year 1: ₹5,000/month
Year 2: ₹5,500/month
Year 3: ₹6,050/month
... and so on.
Use our calculator for detailed scenarios.

Key Factors Affecting SIP Returns

Investment Duration: Longer periods enhance compounding benefits.
Rate of Return: Higher returns yield greater future values.
Consistency: Regular contributions improve outcomes.
Market Conditions: Short-term volatility averages out over time.

Tips for Successful SIP Investing

Start early to maximize compounding.
Select mutual funds with a solid track record.
Increase your SIP amount as your income grows.
Stay invested during market dips to benefit from rupee cost averaging.

Common Mistakes to Avoid

Halting SIPs during market volatility
Not reviewing your portfolio periodically
Overlooking the impact of inflation
Investing without clear financial goals