A Systematic Investment Plan (SIP) is a disciplined way of investing in mutual funds. Instead of committing a large lump sum, you invest a fixed amount regularly—monthly, quarterly, or weekly. This approach helps in averaging the cost of purchase and mitigates the impact of market volatility through rupee-cost averaging.
The Power of Compounding
SIPs leverage the power of compounding. When you invest regularly, you earn returns not only on your principal amount but also on the returns generated over time. The longer the duration of your SIP, the more pronounced the compounding effect becomes.
Realistic SIP Example
Suppose you start an SIP of $500 per month for a period of 10 years. If the fund provides an average annual return of 12%:
✔Total Amount Invested: $60,000
✔Estimated Earnings: ~$56,170
✔Total Wealth Created: ~$116,170
Key Benefits of SIP
Investing via SIP offers several advantages for long-term wealth creation:
Financial Discipline: Automates savings every month.
No Market Timing: You don't need to guess when the market is low.
Flexibility: You can start with as little as $10 or $50 depending on the fund.
Convenience: Amounts are automatically debited from your bank account.
function calculateSIP() {
var P = parseFloat(document.getElementById("monthlyInvestment").value);
var annualRate = parseFloat(document.getElementById("annualReturn").value);
var years = parseFloat(document.getElementById("investmentPeriod").value);
if (isNaN(P) || isNaN(annualRate) || isNaN(years) || P <= 0 || annualRate <= 0 || years <= 0) {
alert("Please enter valid positive numbers for all fields.");
return;
}
var i = (annualRate / 100) / 12;
var n = years * 12;
// SIP Formula: M = P × ({[1 + i]^n – 1} / i) × (1 + i)
var futureValue = P * ((Math.pow(1 + i, n) – 1) / i) * (1 + i);
var totalInvested = P * n;
var estimatedReturns = futureValue – totalInvested;
document.getElementById("totalInvested").innerText = "$" + totalInvested.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("estimatedReturns").innerText = "$" + estimatedReturns.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("totalValue").innerText = "$" + futureValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("sip-results").style.display = "block";
}