SIP Meaning

SIP meaning: Sometimes people are confused about SIP and mutual funds. Let’s clarify that SIP is the method to invest in a mutual fund, and another method is a lump sum amount investment. The SIP calculator is a tool that gives an idea to estimate the future returns on mutual funds.

The SIP calculator is designed to help you understand the calculations on mutual fund investments, and it shows the power of the Systematic Investment Plans (SIPs), Toolifypro.com. The SIP Calculator helps with decision-making in future financial planning; this is a perfect tool to plan future finances.

What is SIP Calculator?

A SIP calculator is a tool that helps investors understand the method of investment in mutual funds and estimate the returns on their investments, or it is a method to invest a fixed amount of money into mutual funds regularly. Most people follow a monthly plan. This method of investment allows small investors to build their wealth over time by contributing small amounts every month. SIP is an ideal option for people who want to start with a small amount and do not have a lump sum to invest.

How SIP Calculation Works

Let’s check the SIP calculator with an initial investment :

1. Monthly Investment Amount: This is the initial investment or fixed amount that an investor contributes to the mutual funds every month. Let’s suppose the investor started with 5000 per month or as per their financial conditions.
2. Investment Tenure: The investment tenure refers to the years that an investor chooses for their investment. Let’s suppose an investor chooses 15 years; the longer tenure helps to earn higher interest from compounding. Let’s suppose an investor chooses a 15-year tenure for their investment or depends on the investor’s financial goals.
3. Expected Rate of Return: This is the expected percentage that investors earn on their SIPs, but the return percentage is subject to market conditions and may vary from year to year. As per the past performance data, mutual funds usually return a minimum of 10-15% annual growth; in that case, let’s take 15% expected returns.

SIP Formula—The SIP calculation works using the below formula and calculates how much returns will grow over time with compounding interest.

Where:

• n = Total number of payments (tenure in years × 12)Formula for SIP Returns:
• FV = Future Value of SIP (Maturity Amount)
• P = Monthly investment (₹5000 in this case)
• r = Monthly rate of return (annual rate of return / 12)

Given:

• Monthly investment (P) = ₹5000
• Annual return (R) = 15% or 0.15
• Monthly rate (r) = 15% / 12 = 0.0125
• Tenure = 15 years = 15 × 12 = 180 months

Step-by-Step Calculation:

1. Future Value of SIP

2. Total Investment:
Total Invested=5000×180=₹900,000

3. Interest Earned:
Total Interest=Future Value−Total Invested

Results:

• Maturity Amount (Future Value): ₹33,84,315
• Total Invested: ₹900,000
• Total Interest Earned: ₹24,84,315

How to Use Our SIP Calculator Online

Our SIP calculator online tool is very simple and easy to use; you have just given three inputs as per your financial goals. Monthly investment amount, tenure of the returns, and expected rate of interest on investments—this tool auto-calculates inputs and displays the results dynamically with a pie chart for better understanding. Investors don’t need to install or download any software; just visit Toolifypro.com and start calculating SIP returns, no matter if you are using a mobile, tablet, or laptop.

SIP Calculator Returns

Calculating SIP returns using a formula is a very difficult and time-consuming activity. However, our SIP calculator performs this task within seconds. The result is the same as calculated using the formula. Additionally, with the SIP calculator, you can view the SIP schedule using the “Show Table” button.

Wrap-up

Our tool has a very simple and user-friendly interface that allows you to estimate the returns and do financial planning for your future goals. The tool has unique features, which include dynamic calculation, chart representation, and a SIP schedule table. This unique feature allows investors to understand the returns in a better way. Whether you are planning for a long-term SIP calculator for 40 years, with our SIP calculator online, you can calculate returns anytime, anywhere, or on any device. But mutual funds are subject to market risk. Please check the mutual fund and related documents carefully.