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SIP Calculator

What is SIP Calculator?

SIP (Systematic Investment Plan) is an investment option offered by Mutual fund companies. One can invest a small amount by using SIP periodically (weekly, monthly, and quarterly). Besides, it offers a well disciplined approach to investing for retail investors especially. This, in turn, creates a positive approach to investing, to create wealth in the long term. In short, the SIP calculator helps you calculate your expected returns and wealth gain.

SIP can make you financially disciplined as well as inculcate the habit of saving. It is always said the earlier the better, and the same goes while investing in a SIP. With the help of a SIP calculator, you can know about assets and invest your money in mutual funds.

Why use a SIP Calculator?

Let us understand the importance of SIP calculator with an example:

Mr. Pillai is 34 year old accountant who lives in a small rented house with his wife and 5 year old son. His main financial goal for next 15-20 years is to buy a house, a car and look after his son’s education and marriage. Therefore, he invests in bonds. However, with future projection, it seems that his saving through bonds will not suffice his future needs and will fall short in achievinghis goals. It could be for 2 main reasons.

  • There are chances that inflation grows faster than returns which will drift away all his savings at the end of the investment term.
  • In case he had invested in equity instruments instead of bonds, he could have earned higher returns.

But, Mr. Pillai states that investing in bonds gives him security and he, in turn, can play safe. So, the question that arises here is what should he do to achieve higher returns and for a substantial growth without being affected by the market turbulence? And the only way for him to achieve it is through SIP. Along with SIP, the only way to get your SIP’s systematically arranged is through SIP calculator.

How does an SIP calculator work?

The returns on SIP are calculated as per compound interest. Here all you need to do is enter the amount you wish to invest every month, choose the number of years you wish to invest and the calculator automaticallycalculates the amount of return. Besides, it also shows you a comparative study of your SIP returns vs other investment options like Fixed Deposits.

Workings of the SIP calculator.

It will first ask you the following questions and on basis of those questions, it will give you a tentative answer.

  • Monthly amount to be invested
  • Investment period
  • Expected Annual Returns
  • In case, you need to check the calculation with (inflation) option is available with most of the premium calculators. Note: Calculators may differ from company to company.

Steps to use SIP calculator

Step 1: Input the SIP amount you are keen on investing. If it is a mutual fund, minimum SIP allowed is INR 500. However, some of the schemes will require INR 1000 to be invested.

Step 2: Here, you can estimate the rate of return on the invested amount, although this is not exact science. But on basis of the track record of the fund, you can determine a probable rate of return and apply that into the SIP calculator.

Step 3: The last variable required is the investment tenure, which states the amount of time you want to continue investing. And in most cases, the minimum tenure should not be less than 6 months.

Based on the above criteria, the following examples, will help you understand better.

For example: The monthly invested amount is INR 1000, investment period is 5 years, the expected annual return is 15% with inflation. Below are the Projected SIP returns for various time durations. [@15%]

DurationSIP Amount (₹)Future Value (₹)
5 years10000.8 Lakhs
5 years10000.8 Lakhs
8 years10001.4 Lakhs
10 years10001.9 Lakhs
12 years10002.6 Lakhs
15 years10003.8 Lakhs
18 years10005.4 Lakhs
20 years10006.7 Lakhs
22 years10008.3 Lakhs
25 years100011.3 Lakhs
28 years100015.2 Lakhs
30 years100018.4 Lakhs
35 years100029.6 Lakhs
Summary
Expected AmountRs. 75990 (0.8 Lakhs)
Amount InvestedRs. 60000 (0.6 Lakhs)
Wealth GainRs. 15990 (0.2 Lakhs)
Assumed annual inflation rate is 6%-

Expected Maturity Amount: Rs. 75,990

For example: The monthly invested amount is INR 5000, investment period is 5 years the expected annual return is 14% and inflation.

Following are the estimated SIP returns for various time durations. [@14%]

DurationSIP Amount (₹)Future Value (₹)
5 years50003.7 Lakhs
5 years50003.7 Lakhs
8 years50006.7 Lakhs
10 years50009.2 Lakhs
12 years500012.1 Lakhs
15 years500017.4 Lakhs
18 years500024.2 Lakhs
20 years500029.6 Lakhs
22 years500036.1 Lakhs
25 years500047.9 Lakhs
28 years500062.8 Lakhs
30 years500075 Lakhs
35 years50001.2 Crores
Summary
Expected AmountRs. 369834 (3.7 Lakhs)
Amount InvestedRs. 300000 (3 Lakhs)
Wealth GainRs. 69834 (0.7 Lakhs)
Assumed annual inflation rate is 6%-

Expected Maturity Amount: Rs. 3, 69, 834

Benefits of SIP calculator

Simple and Fast

The SIP calculator helps to make investment plans faster for an investor. Otherwise, the formula may seem to complex if done by hand and chances of error are higher. However, with the use of SIP calculator, an investor can get accurate results that may be used to make informed investment decisions. And once you put all the details on the calculator, you may get the calculation in the blink of an eye.

Favourable

The SIP calculator favors both - the ones who come with a good financial back ground as well as the ones who don’t as it makes their work simple straightforward. Reason being, most of the individuals can develop their own SIP calculator in Excel, although it makes much sense using the free resources available online.

Helps estimate the future returns

Since the SIP calculator smoothens the playing field for new investors as well as for the experienced investors the result obtained from the calculator are nearly accurate. This, in turn, can help the investor to get benefited from mutual fund investments by helping them estimate their future returns.

Easy to use Interface

The SIP calculators have easy to use interface where one has to provide only few details in order to generate results. And it is one of the key promoters for mutual funds used by multiple fund houses and brokers alike.

Difference between the SIP Calculators Offered by Various Fund Houses/Brokers?

  • With popularity of tax saving mutual fund like an ELSS, there are an increased amount of investors who relatively know little about mutual fund investments. And with an aim to attract investors and increase their interest in mutual funds, fund houses introduced SIP calculators and gave them different names.

  • The popular names include UTI sip calculator, Axis sip calculator, Birla sun life sip calculator etc.

  • As these calculators run on the same formula, their results can be compared. Note: Since SIP calculators run on the same formula as bluechip or equity sip calculator, it’s vital that you don’t get misled by names.

FAQ’s on SIP Calculator

What is SIP Advanced Calculator?

It is an improved version of the normal SIP calculator that would calculate return post inflation. Advance calculator, in turn, gives you a better picture of maturity while taking inflation into consideration.

What is a Lump-sum Calculator?

The Lump-sum calculator will determine the maturity of the current value lump-sum one time investment after a number of years.

What is Delay Cost Calculator?

The delay cost calculator will help you in understanding the impact of delaying the systematic investment by a certain year. All you need to do is input the investment tenure, the expected rate of return and the expected delay in investment and the monthly investment amount. Post which, it will display the maturity amount in the delayed number of years and the cost of delay.

How SIP Calculator is Helpful for Offline Users also?

Since SIP calculator is available online and is used online, it cannot be used for offline purpose.

What are the best SIP calculators available in the market today?

The UTI sip calculator, Axis sip calculator, Birla sun life sip calculator etc. are considered as the popular SIP calculators in the market.

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