SIP Calculator: Systematic Investment Plan Calculator Online
Investing Ideas
What is SIP Calculator?
A Systematic Investment Plan (SIP) calculator is an online tool that helps investors estimate the potential future value of their mutual fund investments. It works by taking three simple inputs: your regular monthly investment amount, the total time period you plan to invest for, and the expected annual rate of return. The calculator then uses the power of compounding to quickly determine the estimated total corpus you would accumulate at the end of the investment tenure. This feature makes it essential for goal-based financial planning.
How does a SIP Calculator Work?
A SIP calculator uses a complex financial formula for the Future Value of an Annuity to estimate your potential returns. It simplifies the calculation of compounding, which allows you to earn returns not just on your investment, but also on the accumulated returns over time.
- Inputs: You provide the monthly investment amount (P), the investment duration, and the expected annual rate of return.
- Process: The calculator converts the annual rate to a monthly rate, plugs these values into the formula, and calculates the total future corpus accumulated.
- Result: It instantly shows the total invested amount versus the estimated future value, demonstrating the wealth generated by compounding.
SIP Calculator Formula
SIP calculators use the following formula to compute SIP returns. The SIP formula is-
FV= P X ({[1 + i] n – 1 / i) X (1 + i)
In the above formula,
FV = The future value or the maturity amount
P= amount invested at regular intervals
n= number of payments made
i= (rate of interest)/ 100
How to Use ICICI Direct SIP Calculator?
- Go to the 'Calculators' section on the ICICI Direct website and select the SIP Calculator.
- Enter the amount in the “Enter Amount” section you plan to invest.
- Use the slider to select the annual rate of return you anticipate from your Mutual Fund investment.
- Choose the investment tenure (in years) as per your goal or requirement.
- The tool instantly provides the estimated total maturity value, including your principal investment and the expected returns.
Example of using a SIP calculator
Let’s assume an investor, Akash who is a young professional in the field of finance. Given Mutual Funds have tremendous potential to earn inflation-beating returns he decides to invest in them. Since he is a salaried individual, he opts for regular SIP to build his corpus.
He decides to invest Rs 5,000 every month for a tenure of 10 years at an expected rate of 8%. The SIP calculator reflects he will receive Rs 9,22,917 on the investment’s maturity.
However, his goal is to at least accumulate Rs 15 lakhs within 10 years at the same expected rate. He now uses the calculator to consider different variations of variables. Ultimately the SIP calculator helps him know that he has to contribute Rs 8,127 every month for 10 years. The Mutual Fund will grow at an expected rate of 8% and approximately earn him Rs 15,00,109 on maturity.
The example clearly depicts how the SIP calculator simplifies Mutual Fund investment calculation and aids in better financial planning.
Why Use ICICI Direct SIP Calculator?
1. Facilitates obtaining a close estimate of the amount accumulated after completing periodic payments for the desired tenure
2. It has a user-friendly interface and is easily accessible and saves your time at the time of performing complex calculations.
3. The online SIP calculator gives you estimates using three different growth scenarios like above-average, average, and below-average returns. You can pick a strategy that best fits your needs and begin investing
4. Using the free online SIP calculator, you can examine numerous return scenarios and make an appropriate investing decision.
Related articles
To start a SIP online:
- You need to visit the website of a particular fund house. There, you have to complete the KYC procedure and select the SIP you want.
- Click on ‘register now’ and fill the application form that pops up to register a new account. Provide a username and password for your online transaction.
- Give details of the specific bank account from which the SIP payments will be debited regularly.
- After the registration process, select the scheme you like
- The investment starts after the fund house sends a confirmation, and the SIPs generally begin after 35-40 days.
There are four types of SIPs available in the market-
- The top-up or step-up SIP: A step-up SIP, also known as a top-up SIP, allows you to increase the amount of your SIP investment at regular intervals.
- Perpetual SIP: A perpetual SIP is an investment that lasts indefinitely, with no set duration or end date
- Flexible SIP: You can alter the amount of your SIP investment with a flexible SIP.
- Trigger SIP: A trigger SIP is a type of investment that is triggered by specific events that you specify. For example, if the NAV of a scheme falls below a given threshold, you can establish a trigger to double the SIP.
*Please note Brokerage would not exceed the SEBI prescribed limit.