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SIP (Systematic Investment Plan) Calculator

Total Invested Amount: $0
Wealth Gained (Returns): $0
Total Future Value: $0

What is a SIP and How Does It Help You Build Wealth?

A Systematic Investment Plan (SIP) is a financial strategy that allows investors to contribute a fixed amount of money into a mutual fund or investment portfolio at regular intervals (usually monthly). Unlike lump-sum investing, SIPs promote financial discipline and take advantage of market volatility through a concept known as Rupee Cost Averaging.

How the SIP Calculation Works

The SIP calculator uses the formula for the future value of an ordinary annuity, adjusted for the fact that payments are usually made at the beginning of the period. The formula is:

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

  • P: Monthly investment amount.
  • i: Periodic rate of interest (Annual rate / 12 / 100).
  • n: Total number of payments (Years × 12).

Real-World Example

Suppose you decide to invest $500 per month for 20 years. You expect an average annual return of 12% based on historical stock market performance.

  • Total Investment: $120,000
  • Estimated Returns: $374,574
  • Total Wealth Created: $494,574

As seen in the example, the "Wealth Gained" is significantly higher than the amount invested. This is the Power of Compounding, where your earnings start earning their own interest over time.

Benefits of SIP Investing

  1. Disciplined Saving: It automates your savings, ensuring you invest before you spend on discretionary items.
  2. Rupee Cost Averaging: When markets are down, your fixed monthly amount buys more units. When markets are up, it buys fewer units. This averages out your cost price over the long term.
  3. Accessibility: You don't need a large amount of capital to start; many funds allow SIPs starting as low as $10 or $50.
function calculateSIP() { var monthlyInvestment = parseFloat(document.getElementById("monthlyInvestment").value); var annualReturnRate = parseFloat(document.getElementById("annualReturn").value); var years = parseInt(document.getElementById("years").value); if (isNaN(monthlyInvestment) || isNaN(annualReturnRate) || isNaN(years) || monthlyInvestment <= 0 || annualReturnRate <= 0 || years <= 0) { alert("Please enter valid positive numbers for all fields."); return; } var monthlyRate = annualReturnRate / 12 / 100; var months = years * 12; // Formula: FV = P × ({[1 + i]^n – 1} / i) × (1 + i) var futureValue = monthlyInvestment * ((Math.pow(1 + monthlyRate, months) – 1) / monthlyRate) * (1 + monthlyRate); var totalInvested = monthlyInvestment * months; var wealthGained = futureValue – totalInvested; // Update UI document.getElementById("totalInvested").innerText = "$" + totalInvested.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); document.getElementById("wealthGained").innerText = "$" + wealthGained.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); document.getElementById("totalValue").innerText = "$" + futureValue.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); } // Run calculation once on load to show initial values window.onload = function() { calculateSIP(); };

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