Products
Download Android Download iOS Download App

SIP Calculator

One of the best habits to get into is the habit of saving and investing. Wealth creation does not happen over time. A conscious effort needs to go into creating the financial corpus that you need for a comfortable life. An ideal investment instrument to help you with this is a Systematic Investment Plan or an SIP.

What is a Systematic Investment Plan?

Systematic Investment Plan, most commonly known as an SIP, is a way to invest in mutual funds at regular intervals. When you invest in a SIP, you can channel a specific sum into a mutual fund of your choice either every month or every quarter. Think of it as a recurring deposit, only, the money is invested in mutual funds. Returns on SIPs are market-linked.

SIPs are a great way to inculcate a savings and investment habit, take advantage of the power of compounding and build wealth with a small start. For instance, some SIPs can be started with as little at ₹100 per month.

What is an SIP Calculator?

A Systematic Investment Plan calculator is a simple online tool that can help you estimate the return on your SIP investments. SIP calculations can be complicated, given that returns are compounded. Using an SIP returns calculator, you can quickly and easily estimate how much your investments will fetch you at the end of your investment period. It is the easiest way to track your financial goal.

How Does an SIP Calculator Work?

SIP calculators use the compound interest formula to calculate SIP returns. While you can calculate SIP returns manually, using an SIP calculator instead to do the grunt work for you is easier. SIP calculators in India can be found online on numerous pages. For instance, you can use ET Money's SIP calculator online to estimate the value of your investments.

Most SIP calculators online will ask for the following parameters to compute your returns: the amount of SIP investment, the frequency, the total duration of investment and the expected returns. Then, using a compound interest formula, it will give you your investment value at maturity.

Benefits of SIP

If you are still not sure of starting your SIP investments, here are five benefits of SIPs that convince you otherwise:

  • Convenient: SIP investments are convenient and hassle-free. Most banks have auto-debit options that you can enable to invest in a SIP plan of your choice. All you need is a mutual fund account, which can be activated within a few days.
  • Small Investment Amounts: SIP investments can be started with as little as Rs. 100 per month. The best SIP plans to invest in with that amount have already been tabulated above.
  • Rupee-Cost Averaging: Volatile markets are a reason why you may refrain from investing in the stock market, or even mutual funds. But SIP investments are made over a period of time. This means that the cost of purchase is averaged out. When the price is higher, you get fewer units. And when the price drops, you get more units for the same amount of investment. This means that the market fluctuations are evened out over the long term, thereby saving you from fluctuations.
  • Compounding: The best part of SIPs is their power of compounding. When you stay invested over the long term, your returns get compounded and you can see a lofty return.
  • Liquidity: An advantage that SIP investments have over other investments like RDs is that you can exit an SIP at any time without a penalty. This means that if you decide to terminate your SIP before the maturity period, you will get the invested amount and returns without losing any money in the process.

How to use ET Money SIP Calculator

The online SIP calculator makes your task simpler and lets you calculate the amount you need to start investing or the amount you will receive at the end of the investment period. That's not all - you can also modify the details to check how it makes a difference to your overall returns.

Let's understand how the calculator functions based on your requirement:

1. You want to invest a fixed amount monthly and want to know the future value of the investment.

  • Step 1: Select 'I want to invest'
  • Step 2: Select the amount you want to invest monthly
  • Step 3: Enter the investment period you have decided to invest for and the expected rate of return.
  • Step 4: The SIP calculator will then tell you how much you will receive at the end of your investment period, your total investment and capital gains.

2. You are investing for a goal and want to know the required monthly investment to meet the goal

  • Step 1: Select 'I know my Goal'
  • Step 2: Enter the amount you want to save for your goal.
  • Step 3: Enter the horizon of your goal in years and percentage of expected return.
  • Step 4: Basis the details you provide, the calculator will tell you how much you should start investing monthly towards a SIP.

Formula to Calculate SIP Return

The SIP formula used to calculate maturity value is the compound interest formula:

M = A [ (1+i)^n-1 ] * (1+i)/i

Where

M is the amount you get at maturity

A is the SIP investment amount

i is the compounded rate of return

n is the duration of investment (in months)

r is the expected rate of return

For instance, assume you want to invest ₹4,000 per month for a duration of 2 years at an expected rate of return of 12%. Using the formula, you should get:

M = 4000*[(1+0.01) ^24 - 1] * (1+0.01)/0.01) = ₹1,08,973

Best SIP Funds

SIPs, at the end of the day, are mutual fund investments. Returns are market-linked, meaning that SIP investment returns are based on the market performance of the mutual fund you invest in. This is why it is important to understand the mutual fund performance before choosing an SIP plan. Here, we have put together the best mutual funds for a SIP starting at Rs. 100, based on their 5-year annualized returns:

Fund Name5-Year ReturnsExpense Ratio
Quant Active Fund22.48% p.a.0.57%
Mirae Asset Emerging Bluechip Fund22.13% p.a.0.75%
Parag Parikh Flexi Cap Fund21.28% p.a.0.98%
UTI Flexi Cap Fund20.63% p.a.1.24%
Canara Robeco Bluechip Equity Fund20.03% p.a.0.57%
Axis Focused 25 Fund19.67% p.a.0.63%
Axis Bluechip Fund19.42% p.a.0.5%
Canara Robeco Emerging Equities Fund18.84% p.a.0.61%
Canara Robeco Flexi Cap Fund18.83% p.a.0.73%
DSP Flexi Cap Fund18.44% p.a.0.98%

How to Invest in Mutual Fund via SIP

If you want to make an SIP mutual fund investment, you can do so via ET Money's online portal in 4 simple steps:

  • Complete your KYC online on ET Money's app. Simply fill in your name, birth date and upload ID and address proof to get KYC done instantly.
  • Choose the mutual fund you want to start your SIP investment in. Following this, you need to choose the amount of investment and duration.
  • Enter your bank details and set up bank mandate using the e-NACH form to enable auto-debit for SIP.
  • Begin investing! After this, the amount of your SIP investment will be auto-debited from your account on the date of investment.

FAQs

There are 4 different types of SIPs most commonly available in the market:

  1. Flexible SIP: A flexible SIP allows you to make changes to the SIP investment amount.

  2. Step-Up SIP: A step-up, also called a top-up SIP, will let you increase your SIP investment amounts at fixed intervals.

  3. Perpetual SIP: A perpetual SIP is an investment that continues indefinitely, meaning, there is no fixed tenure or end date for the investment.

  4. Trigger SIP: A trigger SIP is an investment that functions based on certain trigger events that you mention. For instance, you may set a trigger that the SIP should be doubled if the NAV of a scheme falls to a certain level.

Yes, most fund houses give investors an option to pause their SIP investments for one to three months, based on certain conditions.
No, most SIP investment returns are taxable. However, SIP investments in tax saving mutual fund schemes, i.e. ELSS Mutual Funds, are eligible for tax deduction under Section 80C of the Income Tax Act.
SIP returns are market-linked. This means that the returns depend upon the performance of the mutual fund you invest in.
The choice between the two investments depends upon your investment goal. If you want assured returns over a period of time, RD may be the right choice. However, if you are willing to stomach some risk, you can invest in SIP and possibly earn a higher return over a long term.
There is no limit on the amount of SIP investment. You can start with as little as Rs. 100 per month.
There is no maximum tenure for SIPs. You can invest for as long as you want. In fact, perpetual SIPs allow you to invest indefinitely.
SIPs are investments in mutual funds. Only, instead of investing in one go, SIP investments are structured as regular investments in mutual funds over a period of time.
Yes, you can withdraw your SIP investment any time without penalties. However, ELSS SIP investments have a lock-in period of 3 years.
If you have an auto-debit facility for SIPs through your bank, you don't have to worry about missing an installment because it will automatically be debited. In case of insufficient funds, your SIP investment for that month will be paused and then continued from the next due date. There are no penalties for missed payments because SIP is a voluntary investment.