Future Value
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Total Investment: ₹0
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Table of Contents
What is SIP ( Systematic Investment Plan)?
A SIP (Systematic Investment Plan) is an instrument of investment in mutual funds in which some fixed sums are invested at regular intervals, from daily to annually. It enables the investor to build wealth slowly but steadily because he has the option of periodic contributions, usually monthly or quarterly, to the selected mutual fund scheme. SIPs offer the ability to instill a financial discipline in investors and benefit from the market fluctuations too, besides rupee cost averaging advantage.
What is an SIP Calculator?
An SIP (Systematic Investment Plan) calculator is a financial tool that helps calculate the future value of SIP investment on a few key parameters like investment, tenure, and expected rate of return. It assists investors in planning future investments, setting financial goals, and assessing how much they would have accumulated in the coming years.
How Does an SIP Calculator Work?
An SIP (Systematic Investment Plan) Calculator computes all systematic investments' future value based on the entered details. You enter the monthly amount you're investing, the SIP tenure, and the expected rate of return for one year. The calculator uses the compound interest formula to come up with the future value of your investments. It takes into account the regular contributions and their compounding effects over time.
The formula used is:
SIP Formula
Here is the SIP (Systematic Investment Plan) formula in proper mathematical format:
$$FV = P \times \frac{(1 + r)^n - 1}{r} \times (1 + r)$$
Where:
- FV: Future Value
- P: Monthly Investment
- r: Monthly Rate of Interest (Annual Rate ÷ 12 ÷ 100)
- n: Total Number of Payments (Months)
Frequently Asked Question
What is a SIP Calculator?
A SIP (Systematic Investment Plan) Calculator is an online tool that helps investors estimate the future value of their Systematic Investment Plan (SIP) investments based on inputs like monthly investment amount, investment duration, and expected rate of return.
Is the SIP Calculator accurate?
The SIP (Systematic Investment Plan) Calculator provides estimates based on the inputs. Actual returns may vary due to market fluctuations and other factors.
Can a SIP Calculator account for different rates of return?
Yes, most SIP (Systematic Investment Plan) Calculators allow users to input varying rates of return to see different growth scenarios and understand potential outcomes.
Which is better for beginners, SIP Monthly or SIP Lumpsum?
For beginners, SIP Monthly is typically better. It allows smaller, regular investments, reducing risk and market timing stress. SIP Lumpsum involves a one-time large investment, which can be riskier due to market fluctuations.