SIP Calculator

SIP stands for systematic investment plan, a fixed amount put aside every month, often into mutual funds in India. The calculator is not tied to any fund, so it works for any regular monthly saving. The results update as you change the boxes.

1. Enter the amount you plan to invest each month in Monthly investment. The default is 5000.
2. Enter Expected return (% a year). The default of 12 is only an example, not a forecast. Use a figure you consider reasonable, and try lower ones as well.
3. Set Time (years) from 1 to 60. The default is 10.
4. If you plan to raise the installment every year, enter a percentage in Yearly step-up (%). Leave it at 0 for a flat amount.
5. Choose in Invested whether each installment goes in at the start of each month (the default) or at the end of each month.
6. Read the expected value, total invested, estimated returns, the multiple of the money put in, the number of installments and the year-by-year table.

Numbers are shown without a currency symbol, so use any currency, as long as you read the results in the same one.

The calculator compounds monthly at the yearly rate divided by 12. Without a step-up, the future value is:

FV = P x [((1 + i)^n - 1) / i] x (1 + i)

Here P is the monthly installment, i is the yearly rate divided by 12 and n is the number of months. The last factor is dropped when you choose end of month investing, because the final installment then earns nothing. With a step-up, the installment grows by that percentage after every 12 months, so year 1 uses the amount you typed and year 2 uses it increased by the step-up.

Take 5,000 a month at 12 percent for 10 years, invested at the start of each month. That is 120 installments, or 600,000 invested. The expected value is 1,161,695, so estimated returns are 561,695 and the value is 1.94 times the money put in. Choose end of month instead and the value falls to 1,150,193.

Now add a 10 percent yearly step-up with end of month investing. The total invested becomes 956,245, the expected value 1,670,459, and the monthly amount in the last year rises to 11,790. At a return of zero the answer is plain addition: 1,000 a month for 2 years gives exactly 24,000.

The result is an estimate for general information, not financial advice. The calculator assumes the same return every year, but market returns vary year to year, can be negative and cannot be promised. The 12 percent default is an example, and real investments may earn more or less. The tool accepts a return of zero or more only, so to see a weak outcome, try a low rate such as 0 or 4 and compare.

The figures also leave out several things that matter in real life: the fund you choose, its expense ratio and exit load, taxes on gains, and inflation. A value of 1,161,695 in ten years will buy less than the same number today. Subtract those effects in your own planning, or ask a qualified adviser.

Time matters more than most people expect. With the same 5,000 a month at 12 percent, starting at the beginning of each month:

Doubling the time put in twice the money but produced more than four times the value. That is the effect of compounding on an assumed constant return, and it is why changing the years often moves the answer more than changing the monthly amount. Try the step-up too: a step-up in line with your income growth raises both the money put in and the final value.

The SIP calculator answers one question: what could regular monthly installments grow to? It does not work backward from a goal, and it does not model a one-time deposit or a loan.

• To find the monthly amount needed for a target, use the savings goal calculator.
• For a single deposit that compounds on its own, use the compound interest calculator, and use the APY calculator to compare accounts that compound at different intervals.
• For interest that does not compound, such as some short loans and school problems, use the simple interest calculator.
• To judge a completed investment, enter its cost and final value in the ROI calculator, which also shows the yearly return.
• If the money goes the other way, to repay a loan in monthly installments, the loan EMI calculator is the tool.

Common mistakes are entering the monthly rate where the yearly rate is expected, since the tool divides by 12 itself, mixing up start and end of month timing, and treating a calculated value as a promise. Use the result to compare scenarios, such as 10 versus 15 years or a flat installment versus a step-up, rather than as a prediction.