Monthly SIP Calculator

SIP (Systematic Investment Plan) is an investment method offered by mutual funds where investors can invest a fixed amount regularly (typically monthly) instead of making a lump-sum investment. This strategy allows investors to benefit from price averaging and the power of compounding over time.

SIP returns are calculated using this formula: FV = P × ((1 + r)^n - 1) × (1 + r)/r

Where:

• FV = Future Value (Total Value)
• P = Monthly investment amount
• r = Monthly rate of return (Annual rate ÷ 12 ÷ 100)
• n = Total number of payments (Investment period in months)

This formula accounts for the time value of money and the compounding effect on each installment.

The expected return rate varies based on your investment strategy and market conditions:

• High-risk investments (e.g., equity funds): Historical average of 8-12% annually over long periods
• Moderate-risk investments (e.g., balanced funds): Typically 6-9% annually
• Low-risk investments (e.g., bonds, fixed income): Usually 3-6% annually

Note: These are general ranges and actual returns can vary significantly based on your region, economic conditions, and chosen investment products. It's recommended to use conservative estimates and consult with financial advisors for specific guidance.

Compounding is the process where the returns generated by your investment also earn returns over time. In a SIP, your regular investments generate returns, and these returns further generate additional returns. This creates a snowball effect, particularly over long investment periods.

For example, in a 20-year SIP, a significant portion of your final corpus comes from the returns on returns (compound interest) rather than just your principal investment. This is why starting early and staying invested for longer periods significantly boosts your wealth creation.

While SIPs are designed for long-term investing, it's good practice to review your investments periodically:

• Review your portfolio every 6-12 months
• Reassess your financial goals every 1-2 years
• Check fund performance against benchmarks and peer funds

However, avoid making frequent changes based on short-term market fluctuations. SIPs work best when you allow them enough time to ride out market volatility and benefit from compounding.

Yes, most mutual fund platforms allow you to increase your SIP amount as your income grows. This is known as a SIP Top-up or Step-up SIP. Increasing your investment amount periodically (say, by 10% annually) can significantly boost your final corpus due to the power of compounding.

For example, increasing your monthly investment amount by 10% annually can result in a final amount that's 1.5-2 times larger than keeping the investment amount constant over the same period.

Inflation can significantly impact the real value of your investments over time. Our SIP calculator with inflation adjustment helps you understand:

• Real returns after adjusting for inflation
• Purchasing power of your investment corpus
• Required investment amount to meet inflation-adjusted goals

For example, if your target corpus is ₹1 crore after 20 years and inflation is 6%, you'll actually need about ₹3.2 crores to maintain the same purchasing power. Our calculator helps you plan accordingly for such inflation-adjusted targets.

A Lump Sum investment is when you invest a large amount of money all at once, rather than spreading it over time like in a SIP. This approach is suitable when you have a significant amount ready to invest and believe current market conditions are favorable.

The main advantage is that your entire corpus starts earning returns immediately. However, it also carries the risk of poor timing if the market is at a peak when you invest.

The choice between SIP and Lump Sum depends on various factors:

• SIP Benefits:
  • Disciplined investing habit
  • Rupee cost averaging reduces timing risk
  • Suitable for regular income earners
  • Lower initial investment required
• Lump Sum Benefits:
  • Entire amount starts earning immediately
  • Better returns in consistently rising markets
  • Lower transaction costs
  • Suitable for windfall gains or bonus investments

Many investors use both strategies: Lump Sum when they have significant amounts to invest, and SIP for regular savings.

There are several types of SIP options available:

• Regular SIP: Fixed amount invested at regular intervals
• Top-up SIP: Investment amount increases periodically
• Flexible SIP: Allows varying investment amounts based on your convenience
• Perpetual SIP: No end date, continues until manually stopped
• Trigger SIP: Investments triggered based on market conditions

Choose the type that best fits your investment style and financial goals.

Tax implications depend on the type of mutual fund and holding period:

• Equity Funds:
  • Short-term gains (held < 1 year): 15% tax
  • Long-term gains (held > 1 year): 10% tax on gains above ₹1 lakh per year
• Debt Funds:
  • Short-term gains (held < 3 years): Taxed at income tax slab rate
  • Long-term gains (held > 3 years): 20% tax with indexation benefits

Note: Tax rules may vary by country. Consult a tax professional for specific advice.