SIP Calculator
Estimate future value of your monthly investments
What is a Mutual Fund?
A mutual fund is a professionally managed investment vehicle that aggregates capital from multiple investors to construct a diversified portfolio of financial assets. These assets may include equities (stocks), fixed-income securities (bonds), money market instruments, and other investments. Each investor owns units in the fund, representing a proportional share of the fund’s holdings and returns.
The fund is overseen by a qualified fund manager who makes strategic investment decisions in accordance with the fund’s stated objectives, risk profile, and regulatory guidelines. Mutual funds offer investors access to diversified, professionally managed portfolios with relatively low entry barriers, making them a popular choice for both new and experienced investors.
There are two primary methods of investing in mutual funds:
Systematic Investment Plan (SIP)
Lumpsum Investment
Systematic Investment Plan (SIP)
Systematic Investment Plan (SIP) is a disciplined way to invest in mutual funds. Instead of investing a lump sum, an individual contributes a fixed amount at regular intervals—weekly, monthly, or quarterly.
This method helps investors gradually build wealth over time. By leveraging Rupee Cost Averaging, SIPs reduce the impact of market volatility, buying more units when prices are low and fewer when prices are high.
SIPs also benefit from the power of compounding, as returns are reinvested to generate additional earnings. With its flexibility, low entry barrier, and automation, SIP is a popular choice for long-term financial goals such as retirement, education, or buying a home.
SIP Calculator - Systematic Investment Plan Calculator
A SIP calculator is a powerful tool for planning your investments and achieving your financial goals. One of its primary features is investment planning, as it helps you determine how much you need to invest regularly to reach a specific target. By adjusting your monthly contribution or duration, you can create a plan that fits your budget and objectives.
Another important feature is future value estimation, which shows the approximate amount your investment could grow into over time. This calculation incorporates the power of compounding, helping you understand how your returns are reinvested to generate additional wealth.
Many SIP calculators also provide visual representations of your investments. Through graphs and charts, you can easily see how your money grows over months and years, making complex calculations simple and intuitive.
Finally, a SIP calculator is goal-oriented, allowing you to experiment with different scenarios such as increasing contributions, varying investment durations, or changing expected returns. This flexibility helps investors make informed decisions and stay disciplined on the path to long-term financial success.
How SIP Calculator Works?
Where,
FV = Future value of the investment
P = SIP installment (monthly contribution)
r = Periodic rate of return (monthly)
n = Total number of installments
This formula accounts for the compounding effect over time, showing how your wealth grows as returns are reinvested.
The SIP Calculator uses the compound interest formula:
A lump sum investment is when an investor puts a large amount of money into a financial asset—such as a mutual fund, stock, or bond—all at once, rather than spreading it out over time. This approach is typically used when someone has a significant amount of capital available, like a bonus, inheritance, or savings, and wants to invest it immediately.
Unlike a Systematic Investment Plan (SIP), which involves regular, smaller contributions, a lump sum investment exposes the entire amount to market conditions from day one. If timed well, it can lead to higher returns, especially in a rising market. However, it also carries greater risk if the market declines shortly after the investment is made.
In short, lump sum investing is about making a bold, one-time move—while SIP is more like a steady and strategic climb.
Lumpsum Investment Plan
Meet Ravi, a 28-year-old software engineer from Pune. Wanting to secure his financial future, he decides to start a Systematic Investment Plan (SIP).
He invests ₹5,000 every month into a mutual fund that is expected to generate an average annual return of 12%. Ravi commits to this plan for 10 years.
Every month, ₹5,000 is automatically deducted from his bank account and invested. Over time, his contributions not only grow, but also earn returns—and those returns generate even more returns. This is the power of compounding in action.
📊 After 10 years:
Total Investment: ₹6,00,000 (₹5,000 × 12 × 10)
Wealth Gain: ~₹5,60,000
Future Value: ~₹11,60,000* ( *Final value may vary depending on market performance)
🌱 What This Means
Ravi didn’t have to worry about timing of the market or investing a huge lump sum upfront. By staying consistent and patient, he nearly doubled his money in 10 years.
Think of SIP as planting a money tree 🌳, you water it regularly, and while it doesn’t grow overnight, with time and care, it blossoms and bears fruit.
Example: SIP Investment
📊 Lets Compare - SIP vs Lumpsum vs RD
To understand how different investment methods work, let’s assume the same investment amount:
Ravi invests ₹5,000 per month through SIP for 10 years.
His friend Meera invests a Lumpsum of ₹6,00,000 once and leaves it for 10 years.
Another friend, Arjun, chooses a Recurring Deposit (RD) of ₹5,000 per month for 10 years at 7% interest.
🔹 Results After 10 Years
SIP
Total Investment: ₹6,00,000
Future Value: ~₹11.2 lakh
Wealth Gain: ~₹5.2 lakh
Recurring Deposit(RD)
Total Investment: ₹6,00,000
Future Value: ~₹8.5 lakh
Wealth Gain: ~₹2.5 lakh
Lumpsum
Total Investment: ₹6,00,000
Future Value: ~₹18.6 lakh
Wealth Gain: ~₹12.6 lakh
🔍 Key Differences(SIP vs Lumpsum vs RD)
The information provided on this page is for educational and informational purposes only. It is not financial or investment advice. Past performance of mutual funds, SIPs, or any investment instrument does not guarantee future returns.
Investments are subject to market risks, including loss of principal. The examples and calculations shown (including SIP, Lumpsum, and RD scenarios) are illustrative and may not reflect actual investment outcomes.
Before making any investment decision, you should conduct your own research and consult a qualified financial advisor to ensure your choices align with your financial goals, risk tolerance, and current market conditions.