SIP Calculator
Anywhere, at any time, use the SIP Calculator to determine your SIP returns!
Our user-friendly Systematic Investment Plan (SIP) Calculator allows you to follow the growth of your investments and instantly determine the future value of your SIP. Knowing your SIP returns on the go, planning your investment for better financial outcomes, and receiving correct results depending on your monthly contribution, investment term, and predicted rate of return are all made easier with our tool, regardless of your level of experience with SIPs.
SIP Calculator - Overview
An effective tool for assisting investors in estimating the possible returns from their Systematic Investment Plan (SIP) is a SIP Calculator. Investors can obtain a precise forecast of the future value of their investment by inputting important parameters including the amount invested, the term of the investment, the estimated rate of return, and the frequency of compounding.
Key Features of an SIP Calculator:
● Investment Amount: The monthly contribution you make towards the SIP.
● Investment Duration: The time period (in years or months) for which you plan to invest.
● Expected Rate of Return: The estimated annual return on your investment.
● Compounding Frequency: How often your interest is compounded, e.g., monthly, quarterly, or annually.
By providing an easy-to-understand estimate of returns, an SIP calculator helps investors make more informed decisions about their long-term wealth-building strategy.
What is SIP
Contributing a certain amount of money on a regular basis to a mutual fund scheme is known as a systematic investment plan, or SIP. This approach makes it easy and structured to accumulate wealth over time by enabling you to invest at regular periods, whether weekly, monthly, or quarterly.
Key Features of SIP:
• Fixed Investment Amount: You decide how much money to invest regularly, making it easier to manage your finances.
• Regular Intervals: You can choose to invest weekly, monthly, or quarterly, depending on your financial goals.
• Mutual Fund Investment: Unlike fixed deposits, your money is invested in mutual funds, which can offer higher returns based on the market performance.
Types of SIP (Systematic Investment Plan)
Regular SIP: Basically, a Regular SIP involves investing a set sum of money on a regular basis (monthly, quarterly, etc.).
Benefits: It’s easy to set up and adhere to, making it the perfect choice for investors who value consistency and discipline.
● Flexi SIP:
Description: Flexi SIP allows you to vary your investment amount at fixed intervals based on your financial situation. You have the flexibility to increase or decrease the SIP amount.
Advantages Ideal for those with fluctuating incomes, providing flexibility to adjust your contributions.
● Step-up SIP:
Description: Step-up SIP allows you to increase your SIP contribution by a fixed percentage or amount after a certain period, typically yearly.
Advantages: Helps you keep up with inflation and rising financial goals while matching your growing income.
● Trigger SIP:
Description: Trigger SIP allows you to invest automatically when a specific condition is met, like when the Net Asset Value (NAV) of the mutual fund reaches a predetermined level.
Advantages: It helps you take advantage of market dips, investing when the market price is more favorable.
●Perpetual SIP:
Description: A Perpetual SIP continues indefinitely until you choose to stop it. It’s perfect for long-term goals like retirement or wealth creation.
Advantages: A hands-off investment strategy that continues until you decide otherwise, ideal for passive investors who don’t want to worry about reviewing their SIPs regularly.
How Can SIP Return Calculator Help You
A SIP Return Calculator is a valuable tool that helps you estimate the potential returns from your SIP (Systematic Investment Plan) investments. By inputting key details about your investment, it gives you a projection of the future value of your investment. Here’s how it can help:
● SIP Amount: The amount you invest at regular intervals (e.g., ₹5,000 every month).
The calculator factors in this regular investment to determine the total contribution over time.
● Investment Frequency: The tool considers how often you invest (monthly, quarterly, etc.).
This frequency affects the compounding of your returns and determines how the investment grows over time.
● Expected Rate of Return: The calculator takes the estimated annual return rate of the mutual fund into account (typically, this is based on the fund’s past performance, but it can vary).
The rate of return helps determine how much your investment will grow and compound over time.
● Investment Tenure: The duration for which you plan to invest in the SIP (e.g., 5 years, 10 years, etc.).
Longer investment tenures allow more time for compounding, often resulting in higher returns.
Benefits of Using an Online SIP Calculator
● Convenience: Online SIP calculators are accessible anytime and anywhere as long as you have an internet connection. This makes it easy to plan your investments at your convenience.
● Ease of Use: These calculators are easy to use and don’t require any technological expertise thanks to their straightforward interfaces. Simply enter the required information, and the calculator will take care of the rest. There are no intricate calculations on your end.
● Multiple Scenarios: You can experiment with different SIP amounts, tenures, and expected returns to visualize various investment outcomes. This helps you plan more effectively based on different financial goals or market conditions.
● Goal Planning: An SIP calculator allows you to estimate how much you need to invest regularly to achieve your financial goals. This can be extremely useful for long-term objectives like retirement or buying a house.
● Fund Comparison: Some SIP calculators let you compare estimated returns across different mutual funds, enabling you to make informed decisions about where to invest based on performance projections.
● Visualization: Many calculators provide visual representations of your investment’s potential growth over time, often through graphs or charts. This makes it easier to understand how your SIP will grow and helps motivate you to stay on track.
How Does an Online SIP Calculator Work
An Online SIP Calculator is designed to help you estimate the returns on your Systematic Investment Plan (SIP) investments. Here’s how it works step by step:
1. Input Information: You begin by entering the following key details into the SIP calculator:
SIP Amount: This is the fixed amount you plan to invest at regular intervals (e.g., ₹5,000 per month).
Frequency: How often you will make the investment (monthly, quarterly, etc.).
Expected Rate of Return: The anticipated annual growth of the mutual fund, typically based on the past performance of the fund. For example, 12% per annum.
Tenure: The duration for which you will continue investing (e.g., 5 years, 10 years, etc.).
2. Calculation: The calculator then uses a compound interest formula to estimate the potential returns on your SIP:
M=P×((1+i)n−1i)×(1+i)M=P×(i(1+i)n−1)×(1+i)
Where:
M = Maturity Value (Total value of the investment at the end of the tenure)
P = Principal (the SIP amount invested regularly)
i = Periodic interest rate (Annual expected rate of return divided by the number of investment periods in a year)
n = Total number of payments or SIP installments over the investment period
The formula accounts for the power of compounding, which is key to growing your investments over time.
3. Results: Once you input the details, the calculator provides the following results:
● Maturity Value (M): This is the total value of your SIP investment at the end of the chosen investment period, including your principal and compounded returns.
● Total Investment: This is the total amount you will contribute over the investment tenure. It is simply the SIP amount multiplied by the number of installments.
● Interest Earned: This shows how much interest or profit you will earn on top of your principal amount over the tenure.
How to Use GTS’s Mutual Fund SIP Calculator
● Access the Calculator: Visit GTS’s website or mobile app and navigate to the SIP calculator tool.
● Enter Details: Input the required information, including:
SIP Amount: The amount you plan to invest regularly.
Frequency: How often you’ll invest (monthly, quarterly, etc.).
Expected Rate of Return: Your estimated annual return.
Tenure: The duration for which you plan to make SIP investments.
● Click ‘Calculate’: Once all the details are filled in, click on the ‘Calculate’ button to generate the results.
● Review Results: The calculator will display the maturity value, total investment, and the estimated interest earned based on your inputs. Review these figures to understand how your investment will perform.
● Adjust Inputs: If you wish to experiment with different scenarios, you can adjust the SIP amount, tenure, or expected return, and see how those changes impact the final results.
IP Calculation Formula
To calculate the future value of your Systematic Investment Plan (SIP), we use the compound interest formula, adjusted for regular investments. The formula is:
A=P×((1+r)n−1r)×(1+r)A=P×(r(1+r)n−1)×(1+r)
Example:
SIP Amount: ₹10,000/month
Annual Return: 12%
Investment Duration: 5 years (60 months)
A=10,000×(0.011.8194−1)×1.01
A=10,000×(0.010.8194)×1.01
A=10,000×81.94×1.01
A=10,000×82.76
A=8,27,600
Future Value (A): ₹8,27,600
Total Investment: ₹6,00,000
Total Returns: ₹2,27,600 (earned interest)
By investing ₹10,000 monthly for 5 years at 12% annual return, you will accumulate ₹8,27,600, with ₹2,27,600 as returns from interest. This highlights the power of compound interest over time.
FAQ
SIP investments offer some tax advantages over other investing options, but they are not entirely tax-exempt. Long-term capital gains (LTCG) on assets held for more than a year are taxed at 10% for equity-oriented SIPs; there are no indexation benefits. Long-term capital gains in debt-oriented SIPs are taxed at 20% with indexation benefits, while short-term capital gains (on investments held for less than three years) are taxed in accordance with the investor’s appropriate income tax slab. To fully comprehend the tax ramifications of SIP investments, it is recommended that you speak with a financial professional.
Take into account the following elements while selecting a mutual fund for SIP investing:
1. Investment Goal: Match the fund to your financial objectives, such as retirement or schooling.
2. Risk Tolerance: Align the fund with your level of risk tolerance (aggressive, moderate, or conservative).
3. Performance History: To assess consistency, look at previous returns and risk indicators.
4. Expense Ratio: To optimize returns, choose funds with lower costs.
5. Fund House Reputation: Pick a fund house that has a solid reputation and a wealth of experience.
These elements aid in making sure your SIP investment fits your risk tolerance and objectives.
SIPs are better than FDs because they offer higher return potential through market-linked investments, the power of compounding, flexibility in adjusting or pausing contributions, and the benefit of rupee-cost averaging. These features make SIPs a more attractive option for long-term wealth growth compared to the fixed returns and rigid terms of FDs.
To extend your SIP duration, you can usually do so through the investment platform or by contacting the fund house directly. Before extending, it’s important to reassess your financial goals and the revised tenure to ensure the extended period aligns with your long-term objectives.
SIP returns depend on factors such as market performance, the fund manager’s investment strategy, the expense ratio (lower fees lead to higher returns), and the investment tenure (longer periods benefit from compounding). These elements collectively influence the growth of your SIP investment.