Systematic Investment Plan (SIP) is a disciplined and hassle-free way to invest in mutual funds. It allows investors to regularly invest a fixed amount at predetermined intervals (such as monthly or quarterly) into a mutual fund scheme of their choice.
SIP provides individuals with a disciplined approach to investing by spreading their investments over a period of time, regardless of market fluctuations. It enables investors to accumulate wealth gradually and benefit from the power of compounding.
SIP calculator is a tool that helps investors estimate the potential returns and growth of their investments made through a Systematic Investment Plan (SIP). It takes the following inputs:
M = P × {[(1 + i)n − 1] / i} × (1 + i)
Where: M = Maturity Amount, P = Monthly Investment, i = Periodic Interest Rate, n = Number of PaymentsIn this formula:
Suppose an investor plans to invest ₹5,000 per month in a mutual fund SIP for a period of 10 years. The expected rate of return is assumed to be 12% per annum.
The SIP calculator takes into account the compounding effect of regular investments over time. It calculates the returns based on the specified investment amount, time period, and expected rate of return. By using the SIP calculator, investors can get an idea of the potential growth and evaluate the suitability of their investment plan. It's important to note that the actual returns may vary depending on market conditions and the performance of the chosen mutual fund scheme. SIP calculator provides an estimate and should be used for informational purposes only. Investors should consult with financial advisors and consider other factors before making investment decisions.
