Ira Withdrawal Tax Rate Calculator 2021

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SIP Calculator

Calculate the future value of your Systematic Investment Plan

Total Invested Amount: $0
Estimated Returns (Gains): $0
Total Value (Maturity): $0

Understanding Systematic Investment Plans (SIP)

A Systematic Investment Plan (SIP) is a disciplined approach to wealth creation where you invest a fixed amount of money at regular intervals into a mutual fund or investment scheme. Unlike a lump-sum investment, SIP allows you to benefit from rupee-cost averaging and the power of compounding.

How Does the SIP Calculator Work?

Our SIP calculator uses the future value formula for an annuity due. The mathematical formula used is:

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

  • FV: Future Value (the amount you receive at maturity)
  • P: Monthly Investment Amount
  • i: Monthly rate of interest (Annual Rate / 12 / 100)
  • n: Number of installments (Years × 12)

Benefits of SIP Investing

SIPs are popular because they remove the need to "time the market." By investing consistently, you buy more units when prices are low and fewer units when prices are high. Over the long term, this typically results in a lower average cost per unit.

Real-World SIP Example

Suppose you decide to invest $500 per month for a period of 10 years. If the market delivers an average annual return of 12%, here is how your money grows:

  • Total Invested: $60,000
  • Estimated Gains: $56,170
  • Total Portfolio Value: $116,170

As you can see, in this scenario, your earnings are nearly equal to your principal investment, demonstrating the incredible impact of time and compounding.

Frequently Asked Questions

Is SIP better than Lump Sum?

For most retail investors, SIP is better as it reduces risk through diversification over time and doesn't require a large upfront capital.

Can I change my SIP amount later?

Most mutual funds allow you to "Step-up" your SIP, where you increase the monthly contribution as your income grows.

function calculateSIP() { var monthlyInvestment = parseFloat(document.getElementById("monthlyInvestment").value); var annualReturnRate = parseFloat(document.getElementById("expectedReturn").value); var years = parseFloat(document.getElementById("investmentTenure").value); if (isNaN(monthlyInvestment) || isNaN(annualReturnRate) || isNaN(years) || monthlyInvestment <= 0 || years <= 0) { alert("Please enter valid positive numbers in all fields."); return; } var monthlyRate = annualReturnRate / 12 / 100; var months = years * 12; // SIP Formula: FV = P × ({[1 + i]^n – 1} / i) × (1 + i) var futureValue = monthlyInvestment * ((Math.pow(1 + monthlyRate, months) – 1) / monthlyRate) * (1 + monthlyRate); var totalInvested = monthlyInvestment * months; var estReturns = futureValue – totalInvested; document.getElementById("resTotalInvested").innerText = "$" + totalInvested.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); document.getElementById("resGains").innerText = "$" + estReturns.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); document.getElementById("resTotalValue").innerText = "$" + futureValue.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); document.getElementById("sipResults").style.display = "block"; }

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