A Systematic Investment Plan is a discipline to create wealth by investing in mutual funds a fixed amount at regular intervals of time. Investors build wealth gradually benefitting from rupee cost averaging and power of compounding.

SIP is sometimes mistaken for an investment product by new investors. 

An SIP Calculator is a digital tool made to estimate the possible future worth of your regular investments. It helps you assess the potential returns from regularly investing a fixed sum in mutual funds.

A Systematic Investment Plan encourages you to stay committed and invest a fixed sum of money into the chosen mutual fund scheme at fixed intervals. The investment can be made monthly, quarterly, or weekly, as per the investor's financial convenience, and is set at the beginning of the SIP. 

The calculator demonstrates how this discipline, combined with compounding, can grow your wealth over time.

What is a SIP Calculator?

A SIP calculator is an easy-to-use online tool. It enables you to assess how much mutual fund wealth you will create over time relative to the investment made from today. The calculator is the preferred tool for millennials planning to start investment today.

Put simply, you tell the calculator three things:

1. How much money do you plan to invest every month?

2. For how many years do you want to keep investing?

3. The average yearly return you expect from the fund.

The calculator then shows you two important numbers:

• The total amount of money you will have invested over the years.

• An estimate of the final value your investment could reach in the future.

Remember that this result is only an estimated growth, not a guaranteed output. The actual return from a mutual fund can be higher or lower, depending on market prices.

The calculator's estimate does not include certain fees, such as the fund's annual charges (expense ratio) or early withdrawal fees (exit load). It gives you a helpful starting point to plan your savings.

How can a SIP return calculator help you?

The SIP return calculator helps you visualise the possible growth you can achieve over the years of investment. Clear growth estimates support informed financial decision-making.  

Convenient Investment Planning:

Using the calculator is a smart choice, as it helps investors determine the exact monthly SIP amount needed to reach a specific financial goal.

Tracks Total Contribution:

You can get the total amount that you will invest over time to reach the financial target.

Projects Future Value:

Get the projected value of your investment at maturity. The calculator helps analyse the power of compounding for long-term savings.

How do SIP calculators work?

A SIP plan calculator works on the following formula –

M = P × ({[1 + i]^n – 1} / i) × (1 + i)

In the above formula –

• M indicates the amount due to be received after SIP matures.

• P indicates the amount you need to invest at regular intervals.

• n indicates the number of payments you have made.

• i indicates the periodic interest rate.

  Let us understand with an example:

For example, you want to invest Rs. 2,000 per month for 12 months at a periodic rate of interest of 12%. Now, to calculate the SIP maturity amount, we need the monthly rate of return (i). 

A common mistake one can make is simply divide the annual return by 12. For example, assuming a 12% yearly return as 12 ÷ 12 = 1% per month is incorrect because returns are compounded. 

The right way is to convert the annual return into a monthly return by using the following formula:

Monthly Return = {(1 + Annual Return)^1/12} – 1

So, if you want to check the annual return at 12%, the effective monthly return is 0.95% which is less than 1%.

On reverse checking, if you compound 0.95% for 12 months, it gives back 12% annually. 

Therefore, we can calculate the SIP return value for these assumed values as 

M = P × ({[1 + i]^n – 1} / i) × (1 + i)

With 

P= 2000

i=0.95%

n=12

M ≈ 25,534 approximately in a year.

This is just an indication, the actual return is governed by existing market conditions, rate of return, and policies.

How does SIP differ from Lump Sum Investment Plans?

Here is how SIP differs from Lump Sum Investment:

How to use Stockify’s systematic investment plan calculator?

Here’s how to use Stockify’s SIP calculator in simple steps:

Enter Monthly SIP Amount   

Input the fixed amount you want to invest regularly at the frequency you intend to choose.

Select Investment Period 

Enter the duration in years for which you will continue the SIP.

Provide Expected Annual Return (%) 

Enter the estimated rate of return per annum.

Click “Calculate” 

Hit the button and sit back to see the results to set your investment goals.

View Results Instantly 

Check the estimated maturity amount and total wealth gained.

Calculate your SIP now.

Advantages of using Stockify's Systematic Investment Plan Calculator

Stockify's SIP calculator is a reliable and user-friendly tool for planning your investments, offering several key benefits:

Quick and Free Forecasting 

Instantly estimate your potential returns at no cost. Save time from manual calculations.

Goal-Based Planning 

Plan your investment tenure based on your specific financial goals. Make targets and then SIP goals.

Accurate and Instant Results 

Get precise calculations in seconds. No chances of errors and a simplified investment planning process.

Helps Build Investment Discipline

Stay encouraged with consistent investment goals for long-term wealth creation.