SIP Growth Calculator

SIP Calculator – Systematic Investment Plan Calculator

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Potential investors might mistakenly equate SIPs (Systematic Investment Plans) with mutual funds. In reality, SIPs represent just one approach to investing in mutual funds, with the alternative being a lump sum investment. To evaluate the potential returns from such investment avenues, individuals can employ a SIP calculator. SIPs involve committing a set amount of money to mutual funds at consistent intervals—weekly, quarterly, or monthly, for instance.

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What is a SIP Calculator?

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An uncomplicated tool, the SIP calculator, aids individuals in approximating the returns from their mutual fund investments conducted via SIP. Among millennials, SIP investments in mutual funds have recently gained significant popularity as an investment choice.

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These calculators tailored for mutual fund SIPs offer prospective investors a means to gauge their potential mutual fund investments. Nevertheless, the actual returns furnished by a mutual fund scheme can differ due to diverse factors. It's important to note that the SIP calculator doesn't account for exit loads or expense ratios, if applicable.

This calculator specifically computes the growth in wealth and projected returns for your monthly SIP investments. It indeed provides a rough estimate of the maturity amount attainable through any of your monthly SIP contributions, based on an anticipated annual return rate.

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How can a SIP return calculator help you?

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SIPs, as per the insights of numerous mutual fund specialists, offer a more appealing approach to investing funds in contrast to a lump sum. This methodology aids in fostering financial discipline and cultivating a saving routine, ultimately advantageous for future financial prospects.

Online SIP calculators stand as advantageous instruments, revealing the anticipated returns attainable upon completion of the investment duration.

Several benefits tied to SIP calculators encompass:

• Facilitating the determination of your desired investment amount.

• Providing an overview of your cumulative investment value.

• Offering an estimated projection of the returns to be expected.

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How do SIP calculators work?

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A SIP plan calculator works on the following formula –

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M = P × ({[1 + i]^n – 1} / i) × (1 + i).

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In the above formula –

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• 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.

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Take for example you want to invest Rs. 1,000 per month for 12 months at a periodic rate of interest of 12%.

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then the monthly rate of return will be 12%/12 = 1/100=0.01

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Hence, M = 1,000X ({[1 +0.01 ]^{12} – 1} / 0.01) x (1 + 0.01)

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which gives Rs 12,809 Rs approximately in a year.

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The rate of interest on a SIP will differ as per market conditions. It may increase or decrease, which will change the estimated returns.