Calculator

What is a SIP Calculator?

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.

How do online SIP calculators work?

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:

• Input Parameters:The user needs to input basic parameters such as monthly investment amount, tenure of investment, and expected rate of return. Once the calculator has all this information, it calculates the value of your total investments done over some time and the returns generated over it to give you an idea of how much you will accumulate at the end of the investment period.
• Calculation Process- Using the input parameters, the calculator performs a series of complex financial calculations to compound your investment at your expected rate of return. Compounding refers to the process where your investments earn returns, and these returns themselves earn more returns over time. These calculations help the SIP calculator project how your money will grow over a specified tenure at a given return rate.
• Scenario Analysis- All the online SIP calculators allow you to perform scenario analysis by adjusting the investment amount, tenure, or expected rate of return to see how changes in these factors can affect the final value of your investment.

How to calculate SIP returns?

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

What are the advantages of using SIP calculator-

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:

• User-friendly and time-saving- The user-friendly interface of the online calculator makes it easy to use by anybody. It eliminates the tough manual calculations that take a long time and projects the results instantly.
• Accurate predictions- With the help of automated mathematical algorithms, the SIP calculator predicts accurate results. The higher you put the investment value, the higher will be your returns and vice versa. The results are generated based on your investment value.
• Helps visualize returns- The SIP calculator helps investors visualize how their investments will grow over time. This visualization helps them plan and makes them aware of the returns that they will be receiving.
• Helps in financial planning- SIP calculator helps in predicting the future value of an investment. With the help of these projections, investors can align, adjust, or prepare for their future financial goals like buying a house, planning for retirement, etc.
• Experiment with different scenarios- Our online SIP calculator conveniently allows you to test various scenarios by changing the rate of returns, duration, and monthly SIP instalment multiple times, that too free of cost. Results are generated in just a matter of a few seconds and all this is done without the need for manual calculations.