SIP Calculator
Calculate potential returns on your Systematic Investment Plan
Advertisement
Your SIP Investment Projection
Total Investment
Est. Returns
Total Value
Yearly Growth Projection
Year | Invested | Returns | Total Value | CAGR |
---|
Systematic Investment Plan (SIP): The Smart Way to Invest
A Systematic Investment Plan (SIP) is a disciplined strategy for investing in mutual funds or ETFs where you contribute a fixed amount at regular intervals (monthly/quarterly) rather than making a single lump sum investment. SIPs leverage dollar-cost averaging and compounding to build wealth over time, regardless of market conditions. This method is particularly effective for investors worldwide as it eliminates market timing challenges and makes investing accessible through affordable, regular contributions.
SIP Returns Formula
FV = P X [((1 + r)n - 1) / r] × (1 + r)
Where:
- FV = Future Value of investment
- P = Monthly investment amount
- r = Monthly rate of return (annual rate/12)
- n = Total number of months
Power of SIP
Investing $10,000 monthly at 12% for 30 years grows to $35 million, with you investing only $3.6 million. That's the magic of compounding!
Why SIP is Better Than Lump Sum Investing
Feature | SIP | Lump Sum |
---|---|---|
Market Timing | No need to time the market | Requires good market timing |
Risk | Lower risk through averaging | Higher risk if market peaks |
Discipline | Enforces financial discipline | Requires self-discipline |
Affordability | Start with small amounts | Requires large capital |
Emotions | Removes emotional investing | Emotions can affect decisions |
Dollar Cost Averaging
SIP automatically buys more units when prices are low and fewer when prices are high, averaging your purchase cost over time.
SIP Investment Strategies
For Beginners
- Start with index funds or large-cap funds
- Begin with $500-1000 per month
- Increase SIP amount with salary hikes
- Stay invested for at least 5-7 years
For Experienced
- Diversify across market caps
- Use top-up SIP to increase amounts
- Combine with STP for lump sums
- Rebalance portfolio annually
Rule of Increasing SIP
Increase your SIP amount by 10% every year. $10,000/month at 12% for 30 years grows to $35 million. Increasing by 10% yearly makes it $75 million!
Benefits of SIP Investing
- Disciplined Investing - Automatic contributions build financial discipline
- Dollar-Cost Averaging - Reduces impact of market volatility
- Compounding Growth - Small regular amounts grow significantly over decades
- Accessibility - Start with small amounts (often $50-$100 minimums)
- Flexibility - Adjust contribution amounts or frequency as needed
- Emotional Neutrality - Removes guesswork from investment timing
Types of SIPs Available Worldwide
- Regular SIP - Fixed amount at fixed intervals
- Flexible SIP - Vary contribution amounts within limits
- Step-up SIP - Automatic periodic increases
- Perpetual SIP - Continues indefinitely until stopped
- Trigger SIP - Automated adjustments based on market indicators
Summary for Quick Reference
Systematic Investment Plans (SIPs) offer investors worldwide a disciplined approach to building wealth through regular, automated contributions to mutual funds or ETFs. The SIP formula FV = P × [((1 + r)n - 1) ÷ r] × (1 + r) demonstrates how consistent investments grow through dollar-cost averaging and compounding returns. Accessible with small minimum investments (often $50+), SIPs provide reduced market timing risk, emotional neutrality, and long-term growth potential regardless of your location. Use our global SIP calculator to project your investment growth potential.
Advertisement