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SIP calculator

know your future wealth: use the systematic investment plan calculator to find the total returns from your mutual fund investments
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monthly investment
expected annual return rate
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time period
years
total value:
₹5,808,477
estimated returnsinvested amounttotal amount:₹5,808,477
invested amount
₹3,000,000
estimated returns
₹2,808,477
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Earning money is good. But this is just the start. It's important to increase the value of this existing wealth. And this is where investment vehicles like Mutual Funds come into play. 

To introduce Mutual Funds briefly, they are investment pools handled by professional fund managers. 

These managers pool in the money from different investors to further invest them in stocks, bonds, money market instruments, and global funds for earning greater returns.  

People often use the terms Mutual Funds and Systematic Investment Plan (SIP) interchangeably. But there is a major difference between the two. 

Let's decode this difference: 

  • Mutual Funds is an investment instrument.
  • SIP is an investment route in Mutual Funds that allows an investor to invest a fixed amount in weekly, monthly, or quarterly intervals.

This is where the SIP Calculator for Mutual Funds comes in effect. This online calculator helps you stay updated by providing estimated values of your mutual fund investment returns.  

This calculator, however, does not take into effect the exit load and expense ratio (if any). Thus, it yields "estimated" values. 

How Does This Calculator Work?

This calculator requires information for certain variables: 

  1. Investment Amount
  2. Investment Frequency
  3. Investment Duration
  4. Expected Rate of Return (%)

Further, SIP Investments factor in compounding. In simple words, it means that the initial interest is added to the base amount. In the next cycle, the interest is added to this (new) increased base, yielding greater returns. 

A great advantage of using such calculators is that they include the compounding element in their calculations. 

When you enter the value for these variables and hit submit, the calculator immediately flashes your total investments so far and expected returns upon maturity.  

How Can You Use The SIP Calculator?

As an ordinary person, using investment tools on the internet can be a challenge. However, the calculator is pretty simple in its operation. 

All you're required to do is open the website of your investment platform, follow the path to access the SIP calculator, punch in the required values, and that's it.

Your screen will flash the value of your expected returns. 

Why Is It Important For You?

If you intend to embark on the route of financial discipline, SIP is the way to go. 

With the value of Mutual Funds Assets Under Management (AUM) marking at a whooping Rs 3.4 lakh crore (August 2020), we know that the industry holds tremendous potential. 

Since the SIP route does not depend on the market index and volatility, it is essential to keep a tab on the returns on your fixed investment. 

More so, you would be trusting your money with a professional. While you are assured by their expertise and working acumen, it's always a plus to stay in the loop to prevent unforeseen 'shocks'. 

This way, you are protecting yourself from challenges that otherwise have the potential to overpower your finances. 

Who Uses This Calculator?

You don't need to be a full-time investor to clear the eligibility criteria for accessing this calculator. If you invest your money into a SIP Mutual Fund, you have access to your estimated statements. 

This leads to the next question: Is this valid for new investors exclusively? 

The answer is NO. Say you have been investing in SIP Mutual Funds for 10 years. This SIP Calculator will work equally well for you as for a new investor. 

The calculator helps you gain detailed insights into your overall wealth earned so far, along with the expected wealth upon maturity. 

Let's take an example to understand how the SIP Calculator arrives at the numbers.

Running The Numbers On The SIP Calculator: An Example

Let's assume you are a fresh investor eyeing for SIP Mutual Funds Investments. You want to make a Rs 2,500 monthly investment for the next 12 months, with an expected return of 12%. 

The SIP Calculator uses the following formula to generate results: 

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

where, 

  • FV = Future value earned upon maturity
  • P = fixed investment through SIP
  • i = compounded interest rate
  • n = investment duration

Now, your monthly return would be 12%/12 = 1/100 = 0.01 

Hence, the estimated money you are entitled to earn upon maturity is: 

FV = 2500 ({(1 + 0.01)12 - 1} / 0.01) x (1 + 0.01)

FV = Rs 32,017 approximately in 12 months. 

Some Pertinent Advantages Of The Calculator

The advantages of using a SIP Calculator are manifold. Let's discuss them here:

1. Choosing The Right Mutual Fund Scheme 

We all know Mutual Funds are subjected to market risks. And no one can give a sure-shot answer on expected returns. This calculator, however, helps you work through these challenges to make an informed decision. 

Plugging in your investment values under different SIP Calculators help you understand your risk-return-ratio. This way, you can choose the scheme that yields the highest return against your investments. 

2. Better Financial Planning 

By using this calculator, you tend to be well-informed of the estimated returns on your periodic investments and the maturity value. 

This way, if you intend to plan a big investment in the future, you can estimate your holding position and take a better planning call. 

3. Saves Manual Efforts 

This computer-operated calculator saves you a great deal of time and effort into doing calculations and re-calculations to arrive at the estimated returns. 

However, with one simple click, you can access this calculator, plug in your values, and get the result from anywhere in the world.

4. Benefits Of Compounding 

SIPs is calculated on compound interest. While a minority of people somehow are able to calculate this manually, it's a complex task for most of us, especially for long-term investments. 

With this calculator, this worry remains no more. These calculators incorporate the compounding function and present quick results as accurately as possible. 

Final Words 

Making an investment decision requires a great deal of time and patience. SIP Calculators help you achieve your investment goals. Utilise them to your advantage to reap the fruits of investment management.  

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