Understanding Systematic Investment Plan
A Systematic Investment Plan or SIP is a method of investing in mutual funds and stocks. Here, you invest small sums periodically in funds and stocks of your choice instead of making a lump sum investment upfront. The frequency of SIP investments may be daily, weekly or monthly, although investors commonly prefer monthly SIPs for their convenience. The minimum amount you can invest via SIPs can be as low as Rs. 500. In recent years, micro SIPs, which allow investments as low as Rs. 100, have also become popular.
How Can an SIP Return Calculator Help You?
A SIP calculator is a simple online tool that helps you compute the potential returns from your Systematic Investment Plan in the market. It gives you more clarity about how much your SIP investments will grow over a given period at a specific rate of return.
Since there are no fees to use an online SIP calculator, you can run multiple simulations using the tool to understand better how different SIP amounts may grow at varying potential rates of return. You can also use the SIP returns calculator to obtain more clarity about how your investments may pan out across different periods.
A = P x [{(1 + r)n — 1} ÷ r ] x (1 + r)
Where:
A is the amount that you will receive from your SIP investments at the end of the period
P is the monthly SIP amount
r is the expected rate of return
n is the total number of SIP investments made
What is the SIP Calculator Formula?
A SIP calculator uses a few fundamental inputs provided by the user. These inputs typically include the amount of monthly SIP investment, the expected rate of returns per annum and the period of investment in years. Based on these inputs, the SIP calculator uses a formula to quickly and accurately compute how the total SIP investments made in the fund will grow over the given period. The calculator then displays key information like the amount invested, the returns earned thereon and the total investment value at the end of the period
What is the SIP Calculator Formula?
An online SIP calculator eliminates the need to manually assess how your SIP investments will grow with time. Nevertheless, knowing the formula used by this free online tool can give you insights into how your SIP investments are compounded over the years. Check out the SIP calculator formula below:
A = P x [{(1 + r)n — 1} ÷ r ] x (1 + r)
Where:
- A is the amount that you will receive from your SIP investments at the end of the period
- P is the monthly SIP amount
- r is the expected rate of return
- n is the total number of SIP investments made