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SIP Return Calculator

Total Invested Amount:
Estimated Returns:
Maturity Value:
function calculateSIP() { var amount = parseFloat(document.getElementById('sipAmount').value); var rate = parseFloat(document.getElementById('sipRate').value); var years = parseFloat(document.getElementById('sipYears').value); if (isNaN(amount) || isNaN(rate) || isNaN(years) || amount <= 0 || rate <= 0 || years <= 0) { alert("Please enter valid positive numbers for all fields."); return; } var monthlyRate = rate / 12 / 100; var months = years * 12; // SIP Formula: M = P × ({[1 + i]^n – 1} / i) × (1 + i) var maturityValue = amount * ((Math.pow(1 + monthlyRate, months) – 1) / monthlyRate) * (1 + monthlyRate); var totalInvested = amount * months; var returns = maturityValue – totalInvested; document.getElementById('totalInvested').innerText = "$" + totalInvested.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('estimatedReturns').innerText = "$" + returns.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('maturityValue').innerText = "$" + maturityValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('sipResult').style.display = 'block'; }

Understanding the Systematic Investment Plan (SIP)

A Systematic Investment Plan (SIP) is a disciplined method of investing a fixed amount of money at regular intervals in a mutual fund or other investment vehicles. Unlike a lump-sum investment, SIP allows you to participate in the market over time, reducing the impact of market volatility.

The Power of Compounding in SIP

The primary benefit of a SIP is the power of compounding. When you invest regularly, you earn returns not only on your principal amount but also on the returns generated by your earlier investments. The longer you stay invested, the more pronounced this effect becomes.

What is Rupee Cost Averaging?

SIPs provide the benefit of Rupee Cost Averaging (or Dollar Cost Averaging). When the market is high, your fixed SIP amount buys fewer units. When the market is low, you buy more units. Over the long term, this typically lowers your average cost per unit compared to trying to time the market.

Practical SIP Example

Suppose you decide to invest $500 every month for 15 years. If you expect an annual return of 12%:

  • Total Invested: $90,000
  • Estimated Returns: $162,283.47
  • Total Maturity Value: $252,283.47

As shown in the example, your returns actually exceed your total invested amount due to the long duration and compounding effect.

Key Factors Affecting Your SIP

  1. Consistency: Regularity is more important than the amount. Even small amounts can grow significantly.
  2. Time Horizon: The longer the duration, the higher the wealth creation potential.
  3. Expected Return: While equity markets traditionally offer higher returns (10-15%), they come with higher risk compared to debt funds.

Disclaimer: Mutual fund investments are subject to market risks. The results generated by this calculator are based on mathematical formulas and do not guarantee future returns.

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