SIP Calculator

SIP Calculator

Monthly Investment Amount (₹)

Time Period (Years)

Expected Annual Return (%)

Total Investment: 0

Estimated Returns: 0

Maturity Amount: 0

Value after Inflation: 0

Annual Step-Up (%)

Expected Inflation Rate (%)

What is a Systematic Investment Plan (SIP)?

A Systematic Investment Plan (SIP) is a method of investing a fixed amount of money in mutual funds at regular intervals (e.g., monthly). It promotes disciplined investing, helps average out the purchase cost over time, and leverages the power of compounding to build wealth.

Key Benefits of SIP Investing

SIPs are a popular investment tool for a reason. They offer several significant advantages:

• Power of Compounding: Your returns earn their own returns, creating a snowball effect that can significantly grow your wealth over time.
• Rupee Cost Averaging: By investing a fixed amount regularly, you buy more units when the market is low and fewer when it's high. This averages out your investment cost and reduces the risk of market timing.
• Financial Discipline: Automated monthly investments instill a regular saving habit, keeping you on track to meet your financial goals.

SIP vs. Lumpsum Investing

SIP: Involves investing small, fixed amounts regularly. It's ideal for salaried individuals, reduces market timing risk through rupee cost averaging, and builds a disciplined investment habit.

Lumpsum: Involves investing a large, one-time amount. It can yield higher returns if the market timing is right, but it also carries a higher risk if the market falls after you invest. Lumpsum is generally suitable for experienced investors with a large amount of capital.

What is a Step-Up SIP?

A Step-Up SIP (or Top-Up SIP) is a facility that allows you to increase your monthly SIP amount by a fixed amount or percentage at regular intervals (e.g., annually). This aligns your investments with increases in your income, such as an annual salary hike, helping you reach your financial goals much faster.

How are SIPs Taxed in India?

Taxation depends on the type of mutual fund (Equity or Debt) and how long you stay invested.

• Equity Funds: Gains are considered short-term if sold within 1 year and are taxed at 15%. Gains are long-term if held for more than 1 year; gains up to ₹1 lakh are tax-free per year, and gains above that are taxed at 10%.
• Debt Funds: Gains are short-term if sold within 3 years and are added to your income and taxed at your slab rate. Long-term gains (held over 3 years) are taxed at 20% after indexation benefits.

*Tax laws are subject to change. Please consult a financial advisor for personalized advice.

Understanding the SIP Calculation Formula

The future value of your SIP investments is calculated using the compound interest formula:

Formula:

M = P × [((1 + i)^n - 1) / i] × (1 + i)

Where:

• M = Maturity Value
• P = Monthly Investment Amount
• i = Periodic Rate of Interest (Annual Rate / 12)
• n = Number of Installments (Years × 12)