A Systematic Investment Plan (SIP) is a disciplined approach to investing a fixed amount of money at regular intervals (usually monthly) into a mutual fund scheme. It's a popular method for wealth creation due to its simplicity, flexibility, and power of compounding. This calculator helps you estimate the potential future value of your SIP investments.
How the Calculation Works
The SIP calculator uses the future value of an ordinary annuity formula, adjusted for compounding frequency, to project the total value of your investment at the end of the term.
The core formula for the future value of an annuity is:
FV = P * [((1 + r)^n - 1) / r] * (1 + r) (for end-of-period payments, which is typical for SIP)
Where:
FV is the Future Value of the investment.
P is the periodic payment (your monthly investment amount).
r is the interest rate per period.
n is the total number of periods.
In our calculator:
P = Monthly Investment Amount
Annual Rate = Expected Annual Rate of Return (as a decimal)
r = (Annual Rate / Compounding Frequency)
Investment Duration = Number of Years
n = (Investment Duration * 12) for monthly compounding. This is adjusted based on the selected compounding frequency.
The formula implemented in the calculator is more precisely:
FV = P * [((1 + (Periodic Rate))^Total Periods - 1) / (Periodic Rate)]
Where:
P = Monthly Investment
Periodic Rate = (Annual Rate / 100) / Compounding Frequency
Total Periods = Investment Duration (Years) * 12 (since SIPs are typically monthly, we calculate total months). *Note: The calculator handles the compounding frequency directly in the rate calculation per period. For example, if compounding is annual, the effective periodic rate for the month is not directly used in the annuity formula, but rather the formula is adapted to use the total number of periods (months) and the rate per period.*
Important Note: The formula used here calculates the future value assuming regular investments at the *end* of each period. The compounding frequency selection adjusts the rate per period and the total number of periods considered for the growth calculation. For instance, an "Annually" compounding frequency means the rate `r` is applied once a year, but the periodic payment `P` is still monthly. The effective formula can become complex depending on how different compounding periods interact with monthly payments. This calculator simplifies by using a standard future value of an annuity formula where the rate `r` and number of periods `n` are derived from the annual rate and duration, assuming the *growth* compounds at the selected frequency, even though payments are monthly.
A more accurate representation for varying compounding frequencies with monthly payments involves more complex financial calculations. This calculator uses a widely accepted approximation for illustrative purposes, primarily focusing on monthly contributions growing at an annualized rate, compounded more frequently than annually.
Total Returns = FV – Total Invested = ₹ 11,50,193.45 – ₹ 6,00,000 = ₹ 5,50,193.45
When to Use the SIP Calculator
This calculator is ideal for:
Financial Planning: Estimating future corpus for goals like retirement, buying a house, children's education, etc.
Investment Decision Making: Comparing different investment scenarios based on expected returns and durations.
Goal Setting: Understanding how much you need to invest regularly to achieve a specific financial target.
Budgeting: Allocating funds for long-term investments.
Remember, the expected rate of return is an estimate and actual returns may vary. This tool provides a projection based on consistent investment and assumed growth rates.
function calculateSIP() {
var monthlyInvestment = parseFloat(document.getElementById("monthlyInvestment").value);
var annualReturnRate = parseFloat(document.getElementById("annualReturnRate").value);
var investmentDuration = parseFloat(document.getElementById("investmentDuration").value);
var compoundingFrequency = parseInt(document.getElementById("compoundingFrequency").value);
var totalValueElement = document.getElementById("totalValue");
var totalInvestedElement = document.getElementById("totalInvested");
var totalReturnsElement = document.getElementById("totalReturns");
// Input validation
if (isNaN(monthlyInvestment) || monthlyInvestment < 0 ||
isNaN(annualReturnRate) || annualReturnRate 100 ||
isNaN(investmentDuration) || investmentDuration < 1) {
alert("Please enter valid numbers for all fields. Annual return rate must be between 0 and 100.");
totalValueElement.textContent = "–";
totalInvestedElement.textContent = "–";
totalReturnsElement.textContent = "–";
return;
}
// Calculate rate per period and total number of periods
// Note: We are simplifying the calculation for common SIP scenarios.
// The effective rate per period (r) and number of periods (n) are crucial.
// Since SIPs are monthly, we generally use monthly periods, but the growth
// rate is applied based on the compounding frequency.
// A common simplification for monthly investment is to use monthly periods and an adjusted monthly rate.
// However, the provided formula structure implies annual rate is divided by compounding frequency,
// and the number of periods is duration * 12. Let's stick to that logic for the FV of Annuity.
var periodicRate = (annualReturnRate / 100) / compoundingFrequency;
var numberOfPeriods = investmentDuration * 12; // Total months for investment duration
// Future Value of an Ordinary Annuity Formula: FV = P * [((1 + r)^n – 1) / r]
// This formula assumes payments are made at the end of each period.
var futureValue;
if (periodicRate === 0) {
futureValue = monthlyInvestment * numberOfPeriods;
} else {
futureValue = monthlyInvestment * (Math.pow(1 + periodicRate, numberOfPeriods) – 1) / periodicRate;
}
var totalInvested = monthlyInvestment * numberOfPeriods;
var totalReturns = futureValue – totalInvested;
// Format currency
var formatter = new Intl.NumberFormat('en-IN', { // Using Indian Rupee format as an example
style: 'currency',
currency: 'INR',
minimumFractionDigits: 2,
maximumFractionDigits: 2,
});
totalValueElement.textContent = formatter.format(futureValue);
totalInvestedElement.textContent = formatter.format(totalInvested);
totalReturnsElement.textContent = formatter.format(totalReturns);
}
// Trigger calculation on initial load if values are present
document.addEventListener('DOMContentLoaded', function() {
calculateSIP();
});