A SIP lumpsum calculator is a tool that helps investors calculate the total amount they can accumulate over some time by investing in a mutual fund. The SIP calculator helps investors project returns and the total value of investment over time through SIP, assisting in financial planning and decision-making.
SIP is a popular and disciplined way of investing in mutual funds, where investors contribute a fixed amount of money at regular intervals (e.g., monthly, or quarterly) into their chosen mutual fund scheme. The primary purpose of SIP is to build wealth over time by harnessing the power of compounding, which can lead to significant returns in the long run.
A Systematic Investment Plan return calculator is an online tool or software application designed to help investors calculate the future value of their investments made through SIPs. The online SIP calculator simplifies the process of calculating potential returns on your SIP investments. While predicting total investment value manually is difficult and time-consuming, the SIP calculator helps individuals get an estimated number within seconds. This not only saves time and effort but also eliminates the possibility of human error in calculations. It empowers investors with a user-friendly tool to make well-informed financial decisions, making the concept of systematic investing accessible and comprehensible to a broader audience. The SIP online calculator takes various inputs such as the amount, investment duration, expected rate of return, and the frequency of contributions to provide you with an estimate of the future value of your investments.
An online SIP investment calculator collects inputs such as SIP amount, duration of investment, and expected returns to calculate the final investment value quickly. The online SIP calculator helps you estimate the returns that you're likely to get from your SIP investment over some time.
Here is a breakdown of how an online SIP return calculator works:
The online SIP calculator uses the following formula to display the maturity amount after a particular period
M = P × ({[1 + r]^n – 1} / r) × (1 + r).
For the above formula –
M indicates the amount the investor will receive upon maturity.
P indicates the amount the investor will invest at regular intervals.
n indicates the number of payments an investor will make.
r indicates the periodic rate of interest.
Now, let’s put this formula into application and understand how an online SIP calculator displays the result.
Let’s assume you want to invest Rs. 5,000 per month for 24 months at an expected return rate of 12%.
In this case, the monthly rate of return will be calculated as
12%/12 = 1/100 = 0.01
Thus, in this case, you have the following inputs -
P = 5,000
N = 24
r = 0.01
Substituting these values in the formula, we get
M = 5,000X ({[1 +0.01 ]^{24} – 1} / 0.01) x (1 + 0.01)
which gives Rs ₹1,36,216 in two years.
It is to be noted that the rate of returns you generate on your SIP instalments may differ according to market conditions, and this may result in an increase or decrease in the estimated returns as displayed in the example
Advantages of using Motilal Oswal’s SIP calculator include user-friendly and time-saving, accurate predictions, helps visualize returns, help in financial planning, etc. The online calculator helps make the tough manual calculation work simpler and predicts results in less time.
All the online SIP calculators, including Motilal Oswal’s free SIP calculator, offer below advantages:
