Mutual Fund SIP Calculator
What Is a SIP Calculator?
A SIP calculator is a simple tool that allows individuals to estimate the returns on their mutual fund investments made through a Systematic Investment Plan (SIP). SIP investments in mutual funds have become one of the most popular investment options, especially among millennials.
These mutual fund SIP calculators are designed to give potential investors an estimate of their mutual fund investments. However, the actual returns offered by a mutual fund scheme vary depending on various factors. The SIP calculator does not provide clarification for the exit load and expense ratio (if any).
This calculator will calculate the wealth gain and expected returns for your monthly SIP investment. Indeed, you get a rough estimate of the maturity amount for any of your monthly SIPs, based on a projected annual return rate.
Key Takeaways
- SIPs are a method of investing a fixed sum of money in mutual funds at regular intervals, typically weekly, monthly, or quarterly.
- A SIP calculator helps you determine the potential returns on your mutual fund investments based on a projected annual return rate.
- It assists you in planning your investments by providing an estimate of the total amount invested and the estimated returns at the end of the investment tenure.
- The calculator uses a formula to estimate the maturity amount, considering the periodic investment amount, the rate of interest, and the number of payments made.
How Do SIP Calculators Work?
A SIP plan calculator works on the following formula:
M = P × ([1 + i]^n – 1 / i) × (1 + i)
In the formula:
- M is the amount you receive upon maturity.
- P is the amount you invest at regular intervals.
- n is the number of payments you have made.
- i is the periodic rate of interest.
For example, if you want to invest ₹1,000 per month for 12 months at a periodic rate of interest of 12%:
Monthly rate of return = 12% / 12 = 1% = 0.01
Hence, M = 1,000 × ([1 + 0.01]^12 – 1) / 0.01 × (1 + 0.01) ≈ ₹12,809
The rate of interest on a SIP will differ according to market conditions. It may increase or decrease, which will change the estimated returns.
FAQs
How much can I invest in a SIP?
There is no limit to the amount you can invest in a SIP. The minimum amount is ₹500 per month.
What is the maximum tenure of a SIP?
There is no maximum tenure for a SIP. You can invest as long as you wish. The minimum tenure is 3 years.
Are SIPs similar to mutual funds?
SIP is a method of investing in mutual funds, not a fund or scheme itself. It is an investment vehicle to invest periodically in a fund/scheme of your choice.
Can I modify my SIP amount?
Yes, you can modify your SIP amount anytime.
Do SIPs allow only equity mutual fund investments?
No, you can invest in debt and hybrid mutual funds through SIP.
What are the types of SIPs available?
- Step-up or top-up SIP: Enables you to increase the investment amount automatically at specified intervals.
- Perpetual SIP: Allows you to keep investing indefinitely.
- Trigger SIP: Starts investing based on specific conditions like index level, NAV, date, or event.
- Flexible SIP: Lets you change the investment amount according to your preference.
Can I renew a SIP?
Yes, you can renew a SIP automatically. Companies also provide the option to cancel this auto-renew feature.
Can I pause my investments in a SIP?
Yes, mutual fund companies provide the option of pausing your SIP investments for a specified period.
**Disclaimer:** This financial calculator is provided for illustrative purposes only. The calculations are based on assumptions and estimates, and actual results may vary. The calculator does not constitute financial advice and should not be solely relied upon for making financial decisions. Users are advised to consult with a financial advisor for personalized advice.
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