About this SIP calculator
A Systematic Investment Plan, or SIP, is a way to invest a fixed amount in a mutual fund at regular intervals, usually monthly. Instead of trying to time the market, you put in the same amount every month and let compounding do the work. Over a long period, this averages out the cost of your units and builds a sizable corpus.
This calculator takes your monthly investment, expected annual return and time horizon, and tells you three things: the future value of your SIP, the total amount you would have invested, and the estimated returns you earned. The future value is the corpus you can expect at the end of the tenure, assuming the return stays constant. The total invested is simply your monthly amount multiplied by twelve and by the number of years. The difference between the two is your gain.
The formula used is the standard SIP future value formula, which compounds the monthly contribution at the monthly rate of return. It assumes reinvestment of all gains and no withdrawals during the tenure. Real returns will vary because market returns are not constant, and there may be fund expenses, taxes and exit loads.
Use this tool to set a monthly target for a goal such as a child's education or retirement. Try a few combinations of amount and tenure to see how small increases in your monthly SIP or a longer horizon can make a big difference to the final corpus. Always review your fund's performance periodically and consult a financial adviser before investing.