SIP Calculator
Calculate your return on investment on SIP over time
What is SIP?
SIP is an investment strategy where you invest a fixed amount at regular intervals into mutual funds, whether it's monthly, quarterly, or annually. This can help create wealth over time due to compounding and rupee cost averaging.
How Does SIP Work?
Your fixed amount automatically gets debited from your account in a fund of your choice through the provision of SIP where you will gain units based on the NAV present on the investment date. At the same point in time over the period that has passed after the initial SIP, those same units usually raise in value given the growth on the market .
Types of SIP
Systematic Investment Plans offer various kinds of SIP plans that benefit people in line with varied investor needs. Here are some of the most important types of SIPs:
1. Regular SIP
A Regular SIP is the normal SIP. There you invest a fixed amount regularly, like monthly or quarterly. It is ideal for new investors and long-term investors.
Example: You invest ₹5,000 every month in a mutual fund for 10 years.
2. Step-up SIP (Top-up SIP)
A Step-up SIP provides the option to increase the amount of investments made periodically, either annually or at any desired interval. The investment amount is steadily augmented like an income stream.
Example: From ₹5,000/month, increase ₹500 every year.
3. Perpetual SIP
A Perpetual SIP is one that doesn't have an end date. It's different from a regular SIP, which is set for a particular time frame (say, 5, 10, or 15 years), whereas a perpetual SIP continues till you want to stop it.
Example: SIP without an end date and continuing investment till retirement.
4. Trigger SIP
A Trigger SIP is the option by which one can initiate, suspend, or change SIP based on predetermined events like NAV movements, index variations, or any other market situations. This one is better for advanced investors.
Example: To increase investment automatically if the stock market goes down below a specified mark.
5. Flexi SIP
A Flexible SIP enables you to change your investment amount every month according to your income flow. You may invest more during a month in which you get surplus funds or reduce the investment or even avoid investing if the month is particularly expensive for you.
Example: You might invest ₹5,000 on a regular month but invest ₹10,000 on a surplus income month.
6. Multi-SIP
A Multi-SIP allows you to invest in multiple mutual fund schemes through a single SIP. It helps diversify investments across different categories of funds.
Example: A single SIP of ₹10,000 is split across equity, debt, and hybrid funds.
You Might Find Interesting - SIP vs Lumpsum Investment: Which is Better for You?
What is SIP Investment?
This type of investment SIP refers to continuous investment in a mutual fund scheme through SIPs. It works well for individuals who want the creation of long-term wealth minus the burden of timing the markets. SIP makes it possible for you to initiate investing with amounts as small as you can.
How to invest in SIP?
- Select a mutual fund – A fund that reflects your financial needs and risk profiles.
- Decide the SIP Amount – Decide how much you want to invest each month.
- Choose the SIP Tenure – Choose how long you want to invest through SIP, for 5, 10, or 20 years.
- Register with a Mutual Fund Provider – Open an account with an AMC or a financial platform.
- Link Your Bank Account – Create auto-debit instructions for hassle-free investments.
- Revisit and Monitor – Periodically check your investments and increase wherever feasible.
SIP Calculator
A SIP Calculator provides an estimate of the corpus you would build up after a period. It calculates based on the following inputs:
- Monthly investment amount
- Investment term
- Expected rate of return
It thereby calculates the corpus you could so result in that future. The tool is also very useful for goal planning, retirement or education, or even wealth building.
SIP Calculation
If you invest ₹5,000 per month for 10 years at an assumed 12% annual return, your investment may grow to around ₹11.6 lakhs.
Why use an SIP Calculator?
- Helps set realistic financial goals
- Gives an estimate of the expected corpus
- Assists in planning for future expenses
- Encourages disciplined investing
Difference Between SIP and Mutual Fund
| Feature | SIP | Mutual Fund (Lump Sum) |
|---|---|---|
| Investment Mode | Regular (monthly/quarterly) | One-time investment |
| Risk Management | Lower risk due to cost averaging | Higher risk as entry timing matters |
| Suitable For | Beginners and long-term investors | Investors with a lump sum amount |
| Market Timing | No need to time the market | Entry point matters |
SIP vs Lump Sum Investment: Key Differences
| Feature | SIP (Systematic Investment Plan) | Lump Sum Investment |
|---|---|---|
| Investment Mode | Invests a fixed amount at regular intervals (monthly, quarterly) | Invests a large amount at once |
| Market Timing | No need to time the market (benefits from rupee cost averaging) | Timing the market is crucial for maximizing returns |
| Risk Factor | Lower risk due to cost averaging | Higher risk if invested at market peaks |
| Affordability | Suitable for all investors, as it allows small investments | Requires a large initial amount |
| Volatility Impact | Less impact from market volatility | High impact if invested at the wrong time |
| Compounding Benefits | Gradual wealth accumulation over time | Potential for higher returns if invested at the right time |
| Flexibility | Can be increased, decreased, or paused | Less flexible, as the amount is invested at once |
| Best for | Beginners, salaried individuals, long-term investors | Investors with surplus funds and good market knowledge |
Which One Should You Choose - SIP or Lump Sum?
- Choose SIP if you prefer consistent investing, lower risk, and flexibility.
- Choose Lump Sum if you have surplus funds, market expertise, and a long-term horizon.
