SIP Calculator
What is SIP (Systematic Investment Plan)?
A Systematic Investment Plan (SIP) is a disciplined investment strategy where you invest a fixed amount at regular intervals—typically monthly—into mutual funds or other investment vehicles. SIPs are popular because they help investors build wealth gradually, benefit from rupee cost averaging, and harness the power of compounding. SIPs are widely used for long-term financial goals such as retirement, education, or wealth creation.
How to Use the SIP Calculator
- Type your Principal Amount (optional lump sum you invest at the start).
- Type your Monthly Investment (the fixed amount you'll invest every month).
- Select your Currency (e.g., $, €, £, ₹) from the dropdown.
- Type the Expected Annual Return (in %).
- Type the Investment Period in years.
- Click Calculate to see your SIP maturity value, total invested, and total returns.
Parameters Explained
- Principal Amount: The initial lump sum you invest at the start of your SIP journey.
- Monthly Investment: The fixed amount you contribute every month.
- Currency: The symbol for your preferred currency. This does not convert between currencies, but changes the symbol shown.
- Expected Annual Return: The annual rate of return you expect from your investment, expressed as a percentage.
- Investment Period: The total number of years you plan to invest.
How is SIP Calculated? (Formula Explained)
The SIP calculator uses the following formula to estimate your maturity value:
FV = P × (1 + r)^n + PMT × [( (1 + r)^n - 1 ) / r ] × (1 + r)- FV: Maturity Value (Future Value)
- P: Principal Amount (lump sum)
- PMT: Monthly Investment
- r: Monthly Rate of Return (annual rate ÷ 12 ÷ 100)
- n: Total Number of Months (years × 12)
This formula accounts for both your initial lump sum and your recurring monthly investments, compounding at the specified rate.
Example: SIP Calculation Step-by-Step
Let's say Priya invests a lump sum of ₹10,000 and then invests ₹2,000 every month for 15 years at an expected annual return of 12%.
- Principal Amount (P): ₹10,000
- Monthly Investment (PMT): ₹2,000
- Rate of Return (annual): 12%
- Investment Period: 15 years
First, calculate the monthly rate and total months:
- Monthly Rate (r): 12% ÷ 12 ÷ 100 = 0.01
- Total Months (n): 15 × 12 = 180
Plug into the formula:
FV = 10,000 × (1 + 0.01)^180 + 2,000 × [((1 + 0.01)^180 - 1) / 0.01] × (1 + 0.01)After calculation, Priya's SIP maturity value will be approximately ₹1,181,000. Her total invested amount is ₹10,000 + (₹2,000 × 180) = ₹370,000, and her total returns are about ₹811,000.
Why SIP Matters for You
SIPs are a powerful tool for building long-term wealth. They encourage disciplined investing, reduce the impact of market volatility, and make it easier to achieve financial goals. SIPs are suitable for all types of investors—beginners and experts alike—because they automate the investment process and help you benefit from compounding returns over time.
Normal / Optimal / Average Ranges
- Typical SIP Duration: 5–30 years
- Common Annual Return: 8%–15% (varies by market and fund type)
- Minimum Monthly Investment: As low as ₹500 (or equivalent in other currencies)
- Optimal SIP Amount: Depends on your financial goals and risk tolerance
Benefits of Tracking Your SIP
- Helps you stay on track with your financial goals
- Shows the power of compounding over time
- Enables you to adjust your investments as needed
- Reduces emotional investing and market timing mistakes
- Provides a clear picture of your total invested and returns
Limitations of This Calculator
- Assumes a constant rate of return (actual returns may vary)
- Does not account for taxes, fees, or inflation
- Does not convert between currencies
- Results are estimates and should not be considered financial advice
FAQs About the SIP Calculator
- Is the SIP calculator accurate?
The calculator uses the standard SIP formula, but actual returns may differ due to market fluctuations and fund performance. - Can I use this for any currency?
Yes, select your preferred currency symbol. The calculation itself does not convert between currencies. - What's the minimum SIP amount?
Most funds allow SIPs starting as low as ₹500 or equivalent in other currencies. - How often should I review my SIP?
It's a good idea to review your SIP annually or when your financial goals change. - Does the calculator include taxes or fees?
No, it assumes no taxes or fees. For a more precise estimate, consult your fund provider. - Can I change my SIP amount later?
Yes, most funds allow you to increase or decrease your SIP amount as needed. - What if I miss a monthly payment?
Missing a payment may affect your returns, but you can usually resume your SIP without penalty. - Is SIP better than lump sum investing?
SIP helps average out market volatility, while lump sum investing may yield higher returns if timed well. Both have their advantages.
SIP Calculator – Free Online Tool
Use the free SIP calculator from How To Calculate to estimate your Systematic Investment Plan maturity value, total invested, and returns. This accurate, easy-to-use SIP calculator tool is designed for investors, students, and anyone planning for long-term financial goals.