SIP CALCULATOR

SIP Calculator

SIP Calculator

Blog Article

A Systematic Investment Plan (SIP) Calculator is a financial tool designed to help investors estimate the future value of their mutual fund investments made through SIPs. It provides insights into how small, regular investments can grow over time due to the power of compounding and rupee cost averaging.



How Does a SIP Calculator Work?


A SIP calculator requires three main inputs:






      1. Monthly Investment Amount (SIP amount) – The fixed sum invested every month.




 



      1. Expected Rate of Return (Annual %) – The average expected return on investment.




 



      1. Investment Duration (in years) – The total period of investment.




 

Using these inputs, the calculator determines the maturity amount, showing how much wealth an investor can accumulate over time.



Formula Used in SIP Calculation


A SIP calculator works on the following mathematical formula:


FV=P×(1+r)n−1r×(1+r)FV = P times frac{{(1 + r)^n - 1}}{r} times (1 + r)FV=P×r(1+r)n−1​×(1+r)

Where:






      • FV = Future Value of Investment




 



      • P = SIP installment amount




 



      • r = Monthly rate of return (Annual Rate of Return ÷ 12 ÷ 100)




 



      • n = Number of SIP installments (Months)




 

Benefits of Using a SIP Calculator





      • Quick Estimation: Provides instant results without manual calculations.




 



      • Investment Planning: Helps investors set realistic financial goals.




 



      • Comparison Tool: Allows comparison of different SIP scenarios with varied investment amounts and tenure.




 



      • Compounding Effect: Shows how small investments grow over time.




 

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