SIP Calculator

Calculate wealth creation through Mutual Funds SIPs

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Please enter amount between 12,000/- to 10,00,00,000/-
Years Please enter investing period between 1 to 30 years
% Please enter return percentage between 8% to 20%

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SIP Calculator
A SIP calculator is a useful tool that helps mutual fund investors to make the most of their investments. One of the main reasons why mutual funds have gained immense popularity is that it gives investors the flexibility to choose their own mode of investment; investors can either invest a lump sum amount or invest a smaller amount at frequent intervals through SIP.

What is SIP?

Systematic Investment Plan or SIP is a mode of investment offered by the mutual funds wherein you can invest a fixed sum at frequent intervals; such as monthly, quarterly, etc. Many new investors tend to use SIP and mutual funds interchangeably, but SIP is not an investment itself, but only a means to invest in mutual funds of your choice.

A significant benefit of investing in mutual through SIP is that you can automate the payment by providing a standing instruction to your bank. For example, if you start a monthly SIP of Rs. 1,000, the amount will be debited from your bank account in the mutual fund of your choice on the pre-decided date.

The structured approach of SIP brings discipline to the investment and acts as an excellent avenue for wealth creation in the long-run. When you start a SIP, you invest in a time-bound manner, and, therefore, you need not worry about market fluctuations. As the SIP investments grow through the power of compounding, the longer your stay invested, the higher the returns.

What are the Types of SIP's Available?

Today, mutual fund houses have introduced different SIPs to suit the varying needs of the people. Some of the popular SIPs are:

Flexible SIP

Flexible SIP, also known as Flexi SIP allows you to adjust the investment amount based on your financial condition and market condition. There is a pre-decided formula that allows you to invest more when the market is falling and vice-versa. Similarly, if you are facing a financial crunch, you can reduce the SIP payment and increase the same eventually when you have more liquid income. Thus, flexible SIP gives you the option to adjust the investment amount as required.

Step-up SIP

This type of SIP allows you to increase the investment amount at fixed intervals. For example, you can start a SIP with Rs. 10,000, and instruct your bank to increase the investment amount by Rs. 1,000 after every six months. A step-up SIP is an excellent option for salaried employees who can increase their investment as your income increases.

Perpetual SIP

When you start a SIP, as per the investment mandate, you must mention the start date and the end date in the application form. However, most people indicate the start date, but fail to mention the end date. In such a case, the SIP turns into a perpetual SIP, i.e., the amount will continue to be debited from your account. You can stop the SIP by giving a written application to the fund house. If you wish to invest for only a fixed period, you must mention the end date without fail.

Trigger SIP

This type of SIP is beneficial if you have in-depth knowledge of the financial market and have the expertise to predict the movement in the market. You can set specific triggers for the investment. For example, you can mention that your SIP amount is used to purchase units of a scheme if the NAV falls to a certain level as decided by you.

Benefits of Investing in Mutual Funds Through SIP

Today, mutual funds have become the most preferred investment option among the millennial investors, and most of them prefer investing through SIP as it has several benefits, which are:

  • SIP is an affordable way of investing in mutual funds, especially for the low and middle-income groups. You can start a SIP with as little as Rs. 500.
  • SIP gives the benefit of Rupee-cost averaging, which means you can buy higher units of the funds when the price is lower and vice-versa. Additionally, it helps mitigate the effects of short-term market fluctuation on your investments.
  • The money you invest at frequent intervals grows with a compounding effect. The earlier you start and the longer you stay invested, the higher the returns potential.
  • SIP helps instil a sense of financial discipline. When you automate the SIP payments, you automatically set aside a certain amount from your disposable income towards investment.

What is the ideal duration to invest in SIP?

There is no fixed rule for this, but you must decide the investment duration based on your specific investment goal and the returns you wish to achieve from your investment. Experts suggest it is better to stay invested for at least five years or more to get decent returns. Remember, you must be disciplined with your investments and continue the SIP through different market conditions.

How to Invest in SIP?

Just like any other investments, investing in mutual funds, thorough SIP requires careful planning. Here are a few useful tips you must consider to invest in SIP:

  • First and foremost, you must assess your risk-taking capacity. If you are young, you can afford to take an aggressive approach and take a higher risk. Remember, the higher the risk, the higher the returns potential. But, if you are old and have many financial obligations, you can take a more conservative approach.
  • Once you determine your risk appetite, you must fix a goal. Why are you investing? You may have different goals, including building a retirement corpus, buying a home, marriage, etc. Having a goal will help you choose the right mix of funds in your portfolio.
  • Today, you can choose from a wide array of mutual schemes in the market. However, your selection must be based on your goal and risk appetite. Also, you must consider the fund's performance over the past few years. Once you choose the mutual fund scheme, you must follow the below steps:

    • Fill the application form
    • Comply with the KYC requirements
    • Provide a cancelled cheque
    • Fill the ECS form to authorise the online SIP payments from your account to the mutual fund's account
    • Submit relevant documents

While it is easy to invest in a mutual fund through SIP, people often get confused about how much to invest to accomplish their goals and the returns they will earn. This is where the SIP calculator plays an important role.

What is SIP Calculator?

A SIP calculator is an online tool that calculates the estimated returns you expect to get from your investments through SIP. Thus, it gives you a fair idea of how much you should invest in getting the expected returns. However, it is paramount to know that the actual returns offered by a mutual funds scheme may vary depending on several factors, including the expense ratio and exit load.

How does SIP Return calculator work?

The SIP calculator shows the investment-related results based on the values you enter. Typically, you must enter the investment amount, the frequency of the investment, and the investment duration. The working of the SIP calculator is based on the compound interest formula. Once you enter the necessary details, it automatically does the calculations and shows the approximate returns you can expect from your investments.

You can also do a reverse calculation. You can enter the target amount you would like to earn, and know the EMI amount you must invest to achieve the goal. Also, the calculators provide a comparison of the returns potential from SIP with fixed deposits.

Benefits of Using SIP Calculator

Gives you approximate results

A SIP calculator allows you to get approximate results about your investments, which is vital to take calculated risks. You can enter the investment-related details like investment duration, investment amount, and the expected returns to get accurate information about the total maturity amount. The calculations are backed by a tried and tested formula, and thus it eliminates the need for manual calculations.

It is available 24x7

The SIP calculator also helps you get results faster. You can change the value of the inputs, and the calculator will give you instant results. Additionally, the tool is available online, which means you can access it anytime and anywhere at your convenience.

Helps you make an informed investment decision

Another significant benefit of using the SIP calculator is that it enables you to make smarter and wiser investment decisions. You can change the investment amount or the tenure and see how the SIP may be affected. This, in turn, helps you choose the investment amount and duration to get valuable returns.

Helps you choose the right SIP

Since you can toggle the interest rate on the SIP calculator, you can know about the potential return on different SIPs with the same investment amount and duration. By comparing the results of the various SIPs, you can choose the one that offers maximum returns.

SIP Calculator FAQs (Frequently Asked Questions)

What is a SIP?

A SIP stands for Systematic Investment Plan, which is a way of investing where an investor is allowed to invest a fixed amount of money in mutual funds periodically (weekly, monthly, or quarterly). An investor can decide the SIP date, the amount, and the mutual fund schemes in which he/she wants to invest.

Is SIP a Mutual Fund?

It is a common misconception that a SIP is either a mutual fund or different than a mutual fund. However, that’s not true. A SIP is a way of investing in mutual fund schemes. It is an investment vehicle that allows an investor to invest a fixed amount of money in mutual fund schemes periodically.

SIP Should Be Started When the Markets Are High and Should be Stopped When the Markets Fall. Is that True?

It is recommended not to do such a thing. It is crucial for investors to stay invested. This way, they can increase the likelihood of accumulating a substantial amount of money.

Can I Start a SIP Online?

Yes, you can start SIP online if you have a bank account the required documents to fill the application form

Can I Modify My SIP Amount?

You are allowed to decrease or increase the SIP amount.

What If I Miss a SIP or What If I Don’t Have Enough Money in the Account for Auto-Debit?

Your investment will not be discontinued in case you miss a SIP payment. Furthermore, you don’t have to pay a penalty to the fund house. However, the fund house will terminate your SIP investment if you miss three consecutive SIP payments.

How Do I Cancel My SIP?

You will have to go to the AMP website with your folio number and your bank account number. Select mutual fund SIP and click on cancel SIP.

DisclaimerThe information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.