SIP Calculator - Calculate Your SIP Returns Online

Calculate Your SIP Returns Online

Often prospective investors consider SIP (Systematic Investment Plan) and mutual funds the same. However, SIP is a method of investing in mutual funds. Moreover, SIP is not just restricted to mutual funds. Investors can also invest in stocks and portfolio management services (PMS) via the SIP route. The SIP calculator tool helps in determining the estimated returns on your investments.

What Is an SIP Calculator?

The SIP calculator is a free online financial tool on the Purnartha website. This tool helps you calculate profit on your SIP investments. Purnartha SIP calculator calculates the future value of your SIP investments. To calculate the maturity amount, you must provide inputs on various parameters, such as the regular monthly SIP contributions, the expected rate of return per annum, and the investment duration.

Once you input these details, you understand how your investments may grow by the end of your selected tenure. However, the future value of your SIP investments might be affected due to various external factors. Yet, the SIP calculator helps you get an approximate value of the expected returns. Using an SIP calculator can help you make more informed investment decisions.

What Are the Benefits of Using an SIP Calculator?

There are primarily two major benefits of using a SIP return calculator:

• Determine the required time and rate of return: The SIP calculator helps you calculate the rate of return you need to achieve the desired future value. Also, you can determine the required time to achieve your target amount.
• Choose the right SIP Amount: The SIP calculator helps you to assess how much monthly contributions you need to make at the expected rate of return and achieve the required corpus by the desired investment duration.

How Does an SIP Calculator Work?

The Systematic Investment Plan calculator is based on the following formula:

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

Where

• FV = Maturity amount
• P = Monthly SIP contributions
• n = Number of monthly SIP contributions.
• i = Periodic rate of interest.

SIP Calculator Example

Let’s assume your desired monthly investment is ₹1,00,000, your expected rate of return is 15% p.a., and your investment duration is 10 years.

In that case, your monthly rate of return will be 15% / 12 = 0.0125 and your number of payments will be 10 x 12 = 120.

Putting all the inputs together:

FV = 1,00,000 X ({[1 +0.0125 ]^{120} – 1} / 0.0125) x (1 + 0.0125)

FV = 2,78,65,727.15

This means at the end of 10 years you will have ₹2.8 crores, while your total investment will be ₹1.2 crores with estimated returns of ₹1.6 crores.

You need to note that, market conditions do have an impact on the SIP returns. As the markets are volatile in nature, the SIP returns may increase or decrease, affecting the maturity amount.

How to Use the Purnartha SIP Calculator?

Purnartha SIP Calculator helps determine the estimated returns and total maturity value at the end of the desired investment duration.

Follow the below steps to calculate the estimated SIP returns on maturity using Purnartha SIP calculator:

• Enter your desired monthly SIP amount.
• Enter the expected rate of return (p.a.).
• Enter your desired investment duration (years).

This will instantly give you:

• Total amount invested via monthly contributions.
• The estimated returns on your investment.
• The total value of your investment at the end of your desired duration.

Benefits of Using the Purnartha SIP Calculator

• Ease of Use: The Purnartha SIP calculator requires only three simple parameters to get the result.
• Free to Use: A lot of sophisticated apps require you to shed money out of your pocket. However, the Purnartha SIP returns calculator is free to use.
• Multiple iterations: You can use the Purnartha SIP calculator multiple times without any conditions.
• Helps in financial planning: Purnartha online SIP calculator assists you in financial planning. If know what amount you can invest monthly and for how many years you want to remain invested, you get an idea of how much you will achieve at the end of the investment duration.

What Is a Systematic Investment Plan (SIP)?

SIP or Systematic Investment Plan is one of the methods of investing in stocks, mutual funds, and portfolio management schemes. SIP helps you to invest a fixed sum of money at regular intervals. Investing monthly via SIP is the most preferred option by investors, but there are avenues where you can also invest annually, semi-annually, quarterly, fortnightly, weekly, and daily.

SIP plan is one of the easier and more convenient ways of investing. Investing in SIP has the benefit of rupee-cost averaging over the long term. SIPs are also flexible enough to allow you to eventually increase your contribution. You can take the help of the online SIP calculator to calculate the potential SIP returns of your investment.

What Are the Different Types of SIPs?

There are various kinds of SIPs which you can use to invest as per your requirements:

• Regular SIP: This type of SIP helps investors invest a fixed sum periodically, usually monthly.
• Flexible SIP: This type of SIP, also known as flexi or flex SIP, allows you to change the SIP amount as per your need. Say, during market fall increase the SIP and vice versa.
• Step-up SIP: This type of SIP, also known as Top-up SIP, allows you to automatically increase the SIP contributions at regular intervals. You can check out our step-up SIP calculator.
• Perpetual SIP: If you opt for this type of SIP, your periodical SIP will continue until you cancel. Such SIPs only have the SIP start date.
• Trigger SIP: Investing via trigger SIP can help you change the SIP amounts depending on the trigger event. The trigger could be anything from a specific index or NAV (Net Asset Value) level, an index hitting a 52-week high, etc.
• Multi SIP: This type of SIP allows you to invest in multiple funds of the same fund house with a single SIP.

What Are the Benefits of SIP Investment?

• Investing via SIP helps compound your money over the years.
• Investing in SIP sets you free from timing the market.
• You are likely to achieve greater corpus without investing in one go.
• SIPs help inculcate financial discipline as they help you steer away from emotional financial decisions.

SIP vs Lumpsum: What Is the Difference?

Investing via SIP and lumpsum are the two modes in which you can invest in avenues. Both have their advantages and disadvantages. SIP plan sets you free from timing the market, while lumpsum investments are beneficial if you know how to time the market.

What Are the Tax Implications of SIP Investments?

The SIPs are taxed based on their holding period. According to the Income Tax Act, there are two types of capital gains - long-term and short-term capital gains. And this is different for equity and debt investments.

For equity: Any gain from equity investments held for more than 12 months is considered long-term capital gains and is taxed at the rate of 12.5% on gains above ₹1.25 lakhs. If you sell your equity investments before 12 months, then it is categorised as short-term capital gains and will be taxed at the rate of 20%.

For debt: Any gain from debt investments held for more than 24 months is considered long-term capital gains. If you sell your debt investments before 24 months, then it is considered as short-term capital gains. Both long and short-term capital gains are taxed as per the individual tax slabs.

Common SIP Investment Mistakes to Avoid

Here are some of the pitfalls that you should avoid while investing via SIP:

• Procrastination: Starting early always reaps the benefits, so try to avoid delay in starting with your SIP.
• Discontinue SIP: The benefit of SIP can be experienced when you remain invested for the long term. So, it is always prudent to avoid stopping your SIP midway, unless emergency.

Frequently Asked Questions About SIP Calculators and Investments

1. How much will a ₹10,000 SIP become in 10 years?

If you invest ₹10,000 every month through a SIP for 10 years and assume an annual return of 12%, the investment could grow to approximately ₹23.2 lakh. You would invest ₹12 lakh during the period, while the remaining amount would represent estimated returns. Actual returns may vary depending on market performance.

2. How much SIP is required to accumulate ₹1 crore?

The SIP amount required to accumulate ₹1 crore depends on the investment period and expected rate of return. For example, at an assumed annual return of 12%, investing approximately ₹10,000 per month for 20 years could help you approach a ₹1 crore corpus. Use the SIP calculator to estimate the required investment for your specific goal.

3. How much will a ₹10,000 SIP become in 20 years?

At an assumed annual return of 12%, a ₹10,000 monthly SIP invested for 20 years could grow to approximately ₹99.9 lakh. The total amount invested would be ₹24 lakh, while the remaining amount would represent estimated returns. Actual returns may differ based on market conditions.

4. How is the SIP maturity amount calculated?

The estimated SIP maturity amount is calculated based on the monthly investment amount, investment duration and expected rate of return. Since market-linked investments do not provide guaranteed returns, the actual maturity value may differ from the calculator's estimate.

5. Can a SIP calculator predict actual returns?

No. A SIP calculator provides an estimate based on an assumed rate of return. It cannot predict actual returns because mutual fund and other market-linked investments are affected by market conditions.

6. What is the difference between a SIP calculator and a Step-Up SIP calculator?

A regular SIP calculator estimates the future value when you invest a fixed amount every month. A Step-Up SIP calculator accounts for increasing your SIP contribution periodically, such as increasing the investment by 10% every year, and estimates the potential impact on your final corpus.

7. Can I increase my SIP amount every year?

Yes. You can increase your SIP contribution periodically through a Step-Up SIP. Increasing your investment as your income grows can help you potentially build a larger corpus over the long term.

8. Does a SIP calculator account for inflation?

A standard SIP calculator generally calculates the estimated future value based on the investment amount, duration and expected rate of return. It may not automatically account for inflation. When planning long-term goals, investors should consider how inflation could affect their future purchasing power.

9. How much should I invest in SIP every month?

The appropriate SIP amount depends on your income, expenses, financial goals, existing investments and investment horizon. You can determine your target corpus and investment period and use a SIP calculator to estimate the monthly investment required.

10. Does the SIP calculator include taxes and exit load?

A standard SIP calculator may not account for applicable taxes, exit loads, expense ratios or other investment-related costs. These factors can affect the actual amount you receive when you redeem your investment.

11. What is the 7 5 3 1 rule in SIP?

The 7 5 3 1 is the comprehensive SIP investment strategy where:

Invest for seven-plus years.

Diversify across five key asset classes.

Mentally prepare for 3 challenging phases namely disappointment, irritation, and panic phase.

Step up your SIP annually.

12. What is the 15-15-15 rule in SIP?

According to the 15-15-15 rule, you need to invest 15% of your income for 15 years in an investment avenue offering an average 15% compounded annual growth rate (CAGR).