SIP calculator – Get the most out of it

SIP calculator – Get the most out of it


Investing in mutual funds has become increasingly popular among Indian investors due to its potential for long-term wealth creation. A systematic Investment Plan (SIP) is a disciplined approach to investing in mutual funds, where you contribute a fixed amount at regular intervals.

To help you make informed investment decisions, an SIP calculator is a valuable tool that provides instant insights into the potential returns on your investment. 

What is an SIP calculator?

An SIP calculator is an online tool designed to help investors estimate the future value of their SIP investments. The calculator gives you an estimate of your investment value at maturity by taking into account your investment amount, duration, and expected rate of return.

This enables you to make decisions related to the amount you should invest and the duration of your investment to achieve your financial goals. 

How does the SIP calculator work?

Using an SIP calculator is easy. You need to input key details, including your monthly investment amount, the duration of investment, and the expected rate of return. The calculator then employs a predefined mathematical formula to compute the future value of your SIP investment. With this information, you can gain insights into the growth of your investments over time.

The SIP calculator utilizes the provided information and the following formula to produce a result:

Matured amount = Amount invested × ({[1 +Interest rate] × Time period – 1} / Interest rate) × (1 + Interest rate)

Suppose MrX decides to invest Rs. 5,000 per month in a Systematic Investment Plan (SIP) for 5 years. The annual interest rate offered by the investment is 10%, which is compounded monthly.

Let’s calculate the result:

Amount invested: Rs. 5,000 per month

Interest rate: 10% per annum (divided by 12 for monthly calculation)

Time period: 5 years (12 months in a year)

Matured amount = 5000 × {[1 + (0.10/12)] × (5 × 12 – 1) / (0.10/12)} × (1 + (0.10/12))

Matured amount = Rs. 2,99,491.25

Thus, Mr X’s investment of Rs. 5,000 per month for 5 years in the SIP with a 10% annual interest rate compounded monthly would result in approximately Rs. 2,99,491.25 at the end of the investment period.

 Advantages of an SIP calculator

 Immediate results: One of the significant advantages of an SIP calculator is its ability to provide instant results. Instead of manually crunching numbers or relying on complex financial formulas, the calculator does all the calculations for you within seconds. By using this, you can save both time and effort. It enables you to evaluate various investment scenarios and make well-informed decisions promptly.

 Easy to use: SIP calculators are designed to be user-friendly, even for individuals with little to no financial expertise. The interface is intuitive, with clear instructions on what information needs to be added.

Available online and free of charge: SIP calculators are available online, offered by various mutual fund companies and financial portals. Most calculators are free of charge, allowing you to access them at any time without incurring additional costs. This accessibility empowers you to make investment decisions whenever you want without relying on financial advisors or consultants.

 To wrap up

An SIP calculator is one such tool that empowers Indian investors to maximize the benefits of their SIP investments. So, harness the power of technology, leverage the benefits of an SIP calculator, and embark on your journey towards financial growth and stability.