 # SIP Calculators

## Systematic Investment Plan (SIP)

To start investing in equity mutual funds, one is often asked to save through SIP. The systematic investment plan (SIP) can be monthly or quarterly or at any fixed interval and works better in the case of equity mutual funds (MFs). Investing using the SIP mode helps to keep the average cost of MF units low and also helps avoid the temptation to time the market. SIP suits long-term goals such as children’s education, marriage or for own retirement. But, before one starts a monthly SIP, the investor would want to know as to how much will be the final amount. SIP calculator can be of use and help the investor decide how much one should save to reach their goal of Rs 1 crore or a higher amount.

## How does the SIP calculator work?

SIP calculator is essentially a tool that helps to calculate the maturity value of a series of payments for a specific period at an assumed growth rate. The SIP calculator comes handy for an investor looking to save through mutual funds and want to know how much the total savings will become after a certain period.

The returns on SIP are calculated as per compound interest. Here all you need to do is enter the amount you wish to invest every month, choose the number of years you wish to invest and the sip return calculator automatically calculates the amount of return. Besides, it also shows you a comparative study of your SIP returns vs other investment options like Fixed Deposits.

For example, one may want to know how much will the corpus become after 15 years if a fixed amount of Rs 3,000 is invested every month at an assumed rate of growth of 12 per cent per annum.

## Workings of the SIP Calculator

It will first ask you the following questions and on basis of those questions, it will give you a tentative answer.

• Monthly amount to be invested
• Investment period
• Expected Annual Returns
• In case, you need to check the calculation with (inflation) option is available with most of the sip return calculator

## Steps to use SIP calculator

Step 1: Input the SIP amount you are keen on investing. If it is a mutual fund, minimum SIP allowed is INR 500. However, some of the schemes will require INR 1000 to be invested.

Step 2: Here, you can estimate the rate of return on the invested amount, although this is not exact science. But on basis of the track record of the fund, you can determine a probable rate of return and apply that into the variable SIP calculator.

Step 3: The last variable required is the investment tenure, which states the amount of time you want to continue investing. And in most cases, the minimum tenure should not be less than 6 months.

## 5 different versions of SIP Calculators

1. In most of the mutual fund SIP calculators, you need to input the three fields – Monthly savings amount, time period in years or in months and the assumed growth rate.

For example, if you want to use the SIP calculator HDFC mutual fund, which can be accessed at the link https://www.hdfcfund.com/learn/sip, you need to enter these three fields to arrive at the maturity value.

Illustratively, monthly SIP of Rs 5000 for 20 years can get you about Rs 50 lakh at an assumed growth rate of 12 per cent per annum.

2. In some of the SIP tools such as https://www.mutualfundssahihai.com/en/calculators, there could be a field for quarterly payments as well.

Illustratively, quarterly SIP of Rs 5000 for 20 years can get you about Rs 16 lakh at an assumed growth rate of 12 per cent per annum.

3. In addition to calculating the final amount, some calculators may have the option to find the SIP amount required to save a certain amount. There is a crorepati calculator as well which can tell you how much to save for becoming a crorepati. If your goal is to save Rs 1 crore after 15 years, the tools can help you arrive at the monthly SIP amount. To use such a tool, you may access SIP Calculator Axis bank https://www.axisbank.com/retail/calculators/sip-calculator or the SBI SIP calculator https://www.sbimf.com/en-us/financial-planning-calculators/systematic-investment-planner

4. In some SIP calculators, there is an option for Step-Up of monthly savings. If you wish to increase your monthly SIP amount every year, this SIP calculator UTI MF can be of use to you. (https://www.utimf.com/mutual-fund-calculator/sip-calculator)

5. Some SIP calculators will also give you the option to adjust the corpus with inflation. By entering an assumed inflation figure, you can actually come to know how much the worth of the final amount is as the purchasing power of the rupee falls over time due to inflation.