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Disclaimer:

The values shown here are only for illustration.
The results are generated based on the information provided. It is not intended to be and must not alone be taken as the basis for an investment decision.

Nowadays, SIP or Systematic Investment Plan is becoming more popular than ever among Millennials and Gen Z as internet connectivity continues to grow rapidly across the country. SIPs allow you to reach your financial goals by ensuring that you invest a small amount regularly and accumulate a large sum of money.

Looking forward to starting an SIP investment? You might have heard about a Systematic Investment Plan calculator. This simple-to-use online investment calculator allows you to calculate the total amount you will save with your monthly instalment based on its current performance.

Scroll below to learn how the SIP calculator works and the benefits, how to use it and much more. 

Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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What Is SIP?

What Is SIP

 

SIP or Systematic Investment Plan is an investment mode offered by mutual fund schemes. In this, an investor has to contribute a fixed sum of money in regular intervals, which can be weekly, monthly or quarterly. You can start your mutual journey from an amount as small as Rs 500 per month which is almost similar to a recurring deposit.

An SIP is linked with the market returns depending on the objective of the mutual fund it invests in. The particular scheme can take exposure in equity, debt or a hybrid i.e. a mix of both.

You can make investments more convenient by providing standing instructions to your bank to debit the SIP amount on the chosen date. It will automatically debit the SIP amount from your bank account removing the hindrance of making payments manually.

You can also use specific calculators such as the retirement calculator or the pension calculator to find the amount you will need for your retirement needs.

What is an SIP Calculator?

What is an SIP Calculator?

An SIP calculator is an easy-to-use online financial tool that allows an investor to determine an estimated investment corpus over a particular period. Using a SIP calculator you can separately calculate the principal amount you have to invest to get your desired ROI (return on investment).

However, you must keep in mind that the maturity value calculated by an SIP calculator is an estimated value, not an actual value. Even if you consider a 5-year rate of return or 3-year rate of return there is no surety that the mutual fund scheme will generate the same ROI in the future.

You will also have to keep in mind that an SIP calculator does not account for exit load and expense ratios while calculating your returns. You also need to consider the effect of taxes on your investments.

How Does the SIP Returns Calculator Help You?

How SIP Returns Calculator help you

An SIP calculator is a beneficial tool that can help you determine how much you need to invest to get your desired return on investment. You can also use the tool to assess how long you need to stay invested based on the amount you can currently invest via SIP. This SIP calculator can also help you find out the required amount from your retirement plan. Here are some of the uses of this online tool:

● Helps to ascertain the estimated value of the return

● Gives exact details of your investment separately

● Enable to determine the SIP amount in order to accumulate a target corpus

How Does an SIP Calculator Work?

How Does an SIP Calculator Work

An SIP calculator works based on a mathematical formula. Here the Investor has to enter mainly three details namely: amount of monthly investment, expected rate of return and tenure.

FV = P [(1+i)^n-1 ] x (1+i)/i

FV = Future value/maturity value

P = SIP amount

n = tenure/duration

i = rate of return

r = estimated rate of return

Let’s use the above formula with the help of an example. For instance, Mr Anurag is willing to start an SIP of Rs. 15,000 in a sectoral mutual fund scheme for 20 years (240 months). The 5-year rate of returns of the mutual fund is 16% per annum.

Therefore using the formula,

M = P × ({[1 + i]^n – 1} / i) × (1 + i)

M= 15000 × ({[1 + 0.16]^240– 1} / 0.16) × (1 + 0.16)

FV= 2,62,41,913

The estimated maturity value after 20 years will be Rs. 2,62,41,913. The amount of profits generated will be Rs. 2,26,41,913 while the total investment value will be Rs. 36,00,000.

How to Use a Systematic Investment Plan (SIP) Calculator? 
 

Here is a step-by-step guide to using a systematic investment plan calculator:

Step 1: Simply navigate to an online SIP calculator.

Step 2: Enter the SIP amount, tenure in years and the expected rate of return. Here, you can use the value for returns since inception or the current 5-year returns as the expected rate.

Step 3: As soon as you enter these details, the calculator will display the total maturity value, total return generated and total investment.

What Are the Advantages of an SIP Calculator?

What Are the Advantages of an SIP Calculator

Listed below are some of the advantages of using an SIP return calculator:

● It demonstratesfairly accurate results and removes the hassle of manual calculation saving you time.

● The online tool helps you to ascertain the total corpus value at the end of the term.

● It helps you to set your objectives and plan out your overall finances accordingly.

● It also helps you to determine the required amount to achieve a required corpus considering the current returns.

● You can use this calculator to choose the right investment plans for your financial needs.

To sum up, an SIP calculator is one of the most beneficial financial tools available out there in the market. It can help you to get a fairly accurate estimate of the accumulated profits from the SIP amount, tenure and expected rate of returns. Moreover, it helps to determine the required amount to reach your target corpus considering the prevailing market conditions and the factor of compounding.

Frequently Asked Questions on SIP

1 How much can I invest in an SIP?

The minimum SIP amount is Rs. 500 while there is no restriction on the upper limit. Some fund houses allow you to start an SIP with an amount as low as Rs. 100/month. 

2 What is the maximum tenure of an SIP?

The maximum tenure of an SIP by default is perpetual i.e. there is no maximum tenure of an SIP.

3 Can I pause my investments in an SIP?

Yes, you can pause your mutual fund SIP in an online or offline mode for a maximum period of 6 months. Your resume will automatically resume once the pause period is over.

4 How does an SIP calculator work?

An SIP calculator works based on a mathematical formula of future value, which is M = P × ({[1 + i]^n – 1} / i) × (1 + i). In an online sip calculator, the investor will have to enter the SIP amount, tenure, and expected rate of return.

5 What are the factors to consider while choosing a mutual fund for SIP investment?

There are several factors to keep in mind while choosing a mutual fund scheme which are: investment objective, risk appetite, fund’s performance, expense ratio, etc.

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This interactive does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. HDFC Life Insurance Company Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information reported by the interactive.

The information being provided through this interactive is provided for your assistance/ information only and is not intended to be and must not alone be taken as the basis for an investment decision (“Information”). The recipient/ user assume the entire risk of any use made of this Information. Each recipient /user of this interactive should make such investigation as it deems necessary to arrive at an independent decision while making an investment and should consult his own advisors to determine the merits and risks of such investment. The investment discussed or views expressed may not be suitable for all investors. HDFC Life Insurance Company Limited and its affiliates, group companies, sales staff, financial consultants, officers, directors, and employees may have potential conflict of interest with respect to any recommendation, related information or opinions.

This Information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose. This Information is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject HDFC Life Insurance Company Limited and its affiliates/ group companies to any registration or licensing requirements within such jurisdiction. The distribution of this Information in certain jurisdictions may be restricted by law, and persons in whose possession this Information comes, should inform themselves about and observe, any such restrictions. The Information given in this interactive is as of the date of this report and there can be no assurance that future results or events will be consistent with this Information. This Information is subject to change without any prior notice. HDFC Life Insurance Company Limited reserves the right to make modifications and alterations to this statement as may be required from time to time. However, HDFC Life Insurance Company Limited is under no obligation to update or keep the Information current.

Neither HDFC Life Insurance Company Limited nor any of its affiliates, group companies, directors, employees, sales staff, financial consultants or representatives shall be liable for any damages whether direct, indirect, special or consequential including health, physical well being, lost revenue or lost profits that may arise from or in connection with the use of the Information. Past performance is not necessarily a guide to future performance.

ARN: ED/12/23/6624