SIP Calculator
Calculate the future value of your Systematic Investment Plan (SIP) with compound interest.
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How SIP Investment Works
A Systematic Investment Plan (SIP) is an investment strategy where you invest a fixed amount regularly (usually monthly) in a mutual fund or other investment vehicle. The future value of a SIP investment can be calculated using the following formula:
FV = P × [((1 + r)n - 1) / r] × (1 + r)
Where:
- FV = Future Value
- P = Periodic Investment Amount
- r = Rate of Return per period (as a decimal)
- n = Number of periods
For a step-up SIP where the investment amount increases annually, the calculation becomes more complex as each year's investment grows at a different rate.
The power of SIP lies in its ability to average out market volatility through regular investments, a strategy known as rupee cost averaging.
Benefits of SIP Investment
Rupee Cost Averaging
By investing a fixed amount regularly, you buy more units when prices are low and fewer when prices are high, averaging out the cost over time.
Disciplined Investing
SIP helps you develop a habit of regular investing, which is crucial for long-term wealth creation.
Power of Compounding
The earlier you start, the more time your money has to grow through the power of compound interest.
Flexibility
You can start with small amounts and increase your investment as your income grows.
Reduced Market Timing Risk
You don't need to worry about timing the market, as you're investing regularly regardless of market conditions.
Tax Efficiency
Certain SIP investments in tax-saving mutual funds can help you save on taxes under Section 80C.