SIP Calculator

Invested Amount6,000
Est. Returns5,617
Total Value11,617

What is a Systematic Investment Plan (SIP)?

A Systematic Investment Plan (SIP) is a disciplined approach to investing in mutual funds. It allows you to invest a fixed amount of money at regular intervals (usually monthly) rather than making a large lump sum investment. This tool helps you estimate the future value of your investments based on an expected annual return rate.

How to Use This Calculator

Using the SIP calculator is straightforward:

  • Monthly Investment: Enter the amount you wish to set aside every month.
  • Expected Return Rate: Input the annual percentage rate you expect from your fund. (Equity funds typically range from 10-15%).
  • Time Period: Select how many years you plan to keep investing.

How Does SIP Create Wealth?

SIP works on two powerful financial principles:

  • Rupee Cost Averaging: You buy more units when markets are low and fewer units when markets are high. Over time, this lowers your average cost of investment.
  • Power of Compounding: You earn interest not just on your principal, but also on the interest earned in previous years. The longer you stay invested, the faster your money grows.

SIP vs Lump Sum: Which is better?

For most salaried individuals, SIP is safer. A lump sum investment requires timing the market correctly (buying when low). SIP removes the need to time the market because you invest consistently regardless of ups and downs.

Formula Used

The Future Value of an SIP is calculated using the following formula:

FV = P × [ (1 + i)^n - 1 ] / i × (1 + i)

Where: FV = Future Value, P = Monthly Investment Amount, n = Total number of payments (Years × 12), i = Periodic interest rate (Annual Rate / 12 / 100).

Frequently Asked Questions (FAQ)

Yes. SIP is a voluntary investment. You can stop, pause, or cancel your SIP at any time through your bank or mutual fund app without paying any penalty.

It depends on the fund type and country. Generally, Equity Mutual Fund gains held for over a year are subject to Long Term Capital Gains (LTCG) tax if they exceed a specific limit. Short-term gains are usually taxed at a higher rate.

A "Step-Up" SIP means increasing your investment amount every year (e.g., by 10%) as your income grows. This drastically increases your final corpus compared to a flat monthly amount.

No, SIPs in mutual funds are subject to market risks. While they mitigate risk through averaging, the value of your investment can fluctuate based on market performance.

There is no single "lucky" date. However, it is financially disciplined to set your SIP date 1-2 days after your salary credit date (e.g., the 3rd or 5th of the month) to ensure investment happens before spending.